At BII, we provide capital in many ways: direct equity, debt, intermediated investments (funds, for example), guarantees and trade finance. Each product has different benefits, so a flexible approach helps us achieve a wider range of impact objectives and meet the needs of each business.
Introduced in 2021, our Climate Innovation Facility has a highly catalytic, climate-focused investment mandate. It has a higher risk tolerance than our existing investment strategies and it is usually blended with other forms of BII capital to make pioneering investments. This lets us test, seed, and scale cutting-edge technologies or unproven business models and strategies that with the potential for transformational climate impact – such as reducing greenhouse gas emissions or improving climate resilience – in Africa, Asia and the Caribbean.
Through the facility, we use catalytic capital in different ways, including offering debt on flexible terms to help early-stage companies test and scale climate innovations, and reducing capital risk to mobilise private investment in emerging markets.
This case study is the first in a series on investments and themes in the Climate Innovation Facility. It focuses on how our flexible debt product has helped capital-intensive e-mobility businesses in East Africa and India overcome various challenges in the market. The case study showcases two Climate Innovation Facility investees – BasiGo and Loadshare.
The flexible debt product is unique in its ability to be tailored to the needs of the business and market, with care taken to adhere to the DFI Blended Finance Principles by minimising concessionality, providing a clear rationale for the use of blended finance, supporting a graduation to commercial capital, reinforcing markets and promoting high standards.
Some early lessons from our experience using blended finance to deliver positive impact for the planet through the Climate Innovation Facility are:
- Lesson 1: Timely, flexible debt enables early movers to scale and prove new markets quickly.
- Lesson 2: Structured flexibility can reduce risk and encourage capital mobilisation.
- Lesson 3: Early proof points help to unlock capital and improve financing terms.
These case studies are a means for us to share our early lessons and insights from our experience deploying catalytical capital with like-minded investors.
