GGF secures EUR 82.8 million in investments for green lending

The Green for Growth Fund closed 2023 securing EUR 32.8 million from Germany’s KfW Development Bank and EUR 50 million from FMO, the Dutch entrepreneurial development bank. The senior share investments are intended for green lending, focusing mainly on energy infrastructure and energy efficiency, energy security and climate action.

The Green for Growth Fund (GGF), an impact investment fund advised by Finance in Motion, secured a total of EUR 82.8 million in senior share investments from two longstanding partners at the close of 2023. Germany’s KfW Development Bank has provided EUR 32.8 million in Class A shares funding.

In addition, FMO, the Dutch entrepreneurial development bank, has made a EUR 50 million investment, consisting of a EUR 35 million investment in Class A shares and a EUR 15 million investment in Class B shares.

It bolstered the capacity to support its partner institutions in its 19 mandate countries including Ukraine, GGF said. The transaction sends a strong message of confidence to retail sub-borrowers, micro, small, and medium enterprises (MSMEs), as well as to renewable energy and energy efficiency actors, according to the update.

GGF said it would focus on economic resilience and recovery, specifically via the energy sector, emphasizing infrastructure repairs, rehabilitation and energy efficiency in line with the broader efforts towards facilitating the green transition and effective environmental stewardship.

Significant milestone for GGF

The fund has effectively merged energy security, economic resilience and climate action, showing significant results, the announcement reads. It said that in the last decade GGF crucially steered its partners toward sustainable energy systems, achieving major CO2 reductions, expanded renewable energy use and delivered considerable energy savings. Its efforts avoid 1.2 million tons of CO2 emissions yearly, equivalent to the impact of removing over 800,000 cars from roads, highlighting its dedication to fighting climate change and promoting a greener future.

Knowles: Our focus remains steadfast on building resilience, enabling our partner institutions and, by extension, our end-borrowers, to prepare for and ensure a sustained recovery

“The renewed commitment from KfW and FMO is a testament to the quality and impact of GGF’s work, particularly in these challenging times. Our focus remains steadfast on building resilience, enabling our partner institutions and, by extension, our end-borrowers, to prepare for and ensure a sustained recovery. These investments reflect not only the trust in our mission but also the urgency of our collective efforts in driving the green transition forward,” GGF’s Chairperson Christopher Knowles stated.

KfW and FMO’s recent investments mark a significant milestone for GGF, reinforcing its determination to advance sustainable energy and economic growth, said Borislav Kostadinov, Fund Director for the Green for Growth Fund’s mandate at Finance in Motion.

“This support enables us to deepen our impact in the fund’s mandate countries, particularly in reinforcing energy infrastructure and efficiency. It’s a clear signal of the growing importance and effectiveness of our approach in fostering environmental sustainability and resilience,” he asserted

KfW continues to be impressed by success

Markus Aschendorf, Head of Equity and Funds for Europe, Asia and MENA in KfW, commented that as one of the initiators of GGF, the development bank continues to be impressed by the fund’s unwavering success in meeting its mission commitments, especially under challenging global conditions. “Our ongoing support is a reflection of our belief in the fund’s strategy and its vital role in promoting sustainable development and economic stability,” he added.

GGF has demonstrated the robustness of the blended finance, public-private partnership fund model, delivering impact in a challenging market, according to Director of the Financial Institutions Department of FMO Juan Jose Dada Ortiz.

“The fund is uniquely positioned given its high degree of specialization in green finance, ESG integrity and solid platform to further scale its contribution to decarbonization, which augurs well with FMO’s strategic goal to support SDG 13 – climate action. The products offered by GGF are innovative and there is high demand for these products in the regions where the fund operates, especially due to rising energy prices and focus on energy security. With our investment we aim to support GGF to grow its portfolio and continue to deliver impact at scale,” he pointed out.

Public-private partnership expanding

The Green for Growth Fund invests in measures designed to cut energy use and carbon dioxide emissions and improve resource efficiency in 19 markets across Southeast Europe, the Caucasus, Ukraine, Moldova, the Middle East and North Africa. The fund provides such financing directly to renewable energy projects, corporates and municipalities or indirectly via selected financial institutions.

It was initiated as a public-private partnership in December 2009 by KfW and the European Investment Bank, with financial support from the European Commission, the German Federal Ministry for Economic Cooperation and Development, the European Bank for Reconstruction and Development and the Austrian Development Bank (OeEB).

GGF is active in 19 markets: in Southeast Europe, the Caucasus, Middle East and North Africa and in Ukraine and Moldova

The fund’s growing investor base comprises donor agencies, international financial institutions, and institutional private investors, including the International Finance Corporation, FMO and German ethical bank GLS. GGF’s Technical Assistance Facility maximizes investment impact through support for capacity building at local financial institutions and partners.

Finance in Motion is a global impact asset manager focused exclusively on sustainable development in emerging markets and developing economies. The company structures, manages and advises impact investment funds that bring together public and private investors to address climate change, strengthen biodiversity conservation, foster the sustainable use of natural resources, improve livelihoods and promote economic opportunities.