Climate Fund Managers (CFM), a climate-focused blended finance investment manager, announced today the final close of its second blended finance facility, Climate Investor Two (CI2), at USD 1.065 billion.
With new commitments of USD 190 million plus a EUR 205 million EFSD+ guarantee from the European Union, CI2 surpasses its initial USD 1 billion target, becoming the largest climate adaptation infrastructure fund focused on emerging markets globally. The fund blends public and private capital to invest in and co-develop water, waste and oceans infrastructure in emerging markets, including low-income countries, across Africa, Asia and Latin America.
The United Nations Environment Programme estimates the adaptation finance gap in developing countries at USD 194–366 billion per year¹, yet current funding levels remain far below what is needed. Formed in 2019 in partnership with the European Commission and the Dutch Fund for Climate and Development (DFCD), CI2 directly contributes to closing this gap, demonstrating how blended finance can accelerate capital mobilisation into one of the most underfunded areas of climate action. CI2 delivers social and environmental impact at scale, directing funding to hard-to-reach markets in sectors such as water services, sanitation and waste management. By the end of its life, the fund aims to provide safe drinking water and improved sanitation to 16.5 million beneficiaries and to protect or restore 2.2 million hectares of ecosystems.
CI2’s success reflects strong investor confidence in adaptation and CFM’s blended finance model, which combines private and public capital to balance risk and mobilise private sector investment at scale. CI2 is supported by a diverse investor base including development finance institutions, multilateral finance institutions, public sector banks and institutional investors, including asset managers, pension funds and insurers.
The close also marks the introduction of a pioneering Bridge-to-Bond mechanism, facilitated by our strategic partner, Sanlam Investments, based in South Africa. The facility’s structure includes a bridge loan from Sanlam Alternative Investments, supported by a guarantee from the European Commission. The bridge loan is envisaged to be taken out by a climate bond within a few years. This innovative mechanism creates a pathway for fixed income markets to access CI2’s underlying asset base, representing a breakthrough for CFM in mobilising institutional bond investors for its funds.
The guarantee agreement was made possible by CFM’s achievement of ‘Pillar Assessed Entity’ status with the European Commission. This recognition, which until now has been almost exclusively held by European Development Finance Institutions and European Multilateral Development Banks, reflects the strength of CFM’s governance, controls and operational systems and enables it to directly manage guarantees on behalf of the EU. The status, as well as the guarantee, will enable CFM Managed Vehicles to further contribute to the EU’s Global Gateway and Team Europe Initiatives.
Andrew Johnstone, CEO of CFM, said: “While climate mitigation remains critical in the race to end the climate crisis, adaptation must be an equal priority. Closing Climate Investor Two at more than USD 1 billion in a challenging environment is a major milestone that highlights investor appetite for adaptation and our ability to structure compelling opportunities in this space. With the support of Sanlam Investments and the European Union, we have been able to pioneer the new Bridge-to-Bond mechanism, opening access to climate finance for a much broader group of investors.”
Mark Moorhouse, Executive Head Infrastructure Finance at Sanlam Alternative Investmentssaid:
“As a sustainability-driven asset manager, our purpose is to create long-term sustainability for investors – but also for future generations and our planet. We leverage strategic partnerships to create bespoke opportunities for clients, ensuring that our global reach translates into meaningful, customised investment experiences. Our partnership with CFM since 2017, enables us to respond to the world’s urgent climate crisis, particularly in developing economies. We are proud to have facilitated this innovative and landmark financing model for the close of CI2 and look forward to the impact these funds will have for those who need it most.”
CI2’s blended finance structure enables investment across the project lifecycle from development to construction. The facility comprises a Development Fund, providing concessional capital and expertise for early-stage project development to reduce risk, and a Construction Equity Fund – a tiered facility accommodating both public and private investors’ risk-return profiles during asset build-out.
Since its first close in 2021, CI2 has committed USD 339 million to 25 climate adaptation and mitigation projects across Africa, Asia and Latin America. These include water supply and distribution projects in Vietnam and the Philippines, water desalination projects in Thailand and Kenya, waste-to-energy platforms in Sierra Leone, South Africa and Thailand; and the world’s largest debt-for-nature swap in Ecuador to secure long-term funding for the Hermandad Marine Reserve and the Galápagos Islands.
The fund builds on the success of Climate Investor One (CIO), CFM’s first blended finance fund focused on renewable energy infrastructure. CIO is a ~USD 1 billion facility that has financed a portfolio of solar, wind and hydroelectric projects across Africa, Asia and Latin America. In February, CFM launched its third blended finance fund, Climate Investor Three (CI3), a USD 750mn-1bn target facility focused on the energy transition and green hydrogen.
CFM is a climate-focused blended finance investment manager operating in emerging markets across Africa, Asia, and Latin America. CFM raises and deploys blended climate finance funds, working in partnership to deliver climate-resilient solutions at scale and pace. With over USD 2 billion in assets under management and targeting an additional USD 4 billion, CFM’s private equity and private credit facilities address key areas of climate change mitigation and adaptation, including renewable energy, green hydrogen, energy transmission, water, waste and sanitation, and biodiversity and oceans infrastructure. CFM’s funds are supported by public and private sector organisations, with public capital deployed strategically to balance risk and mobilise private sector capital, enabling investment across the project lifecycle – from development to construction and operation. Established in 2015, CFM is a joint venture between Dutch development bank FMO and Sanlam InfraWorks of the Sanlam Group of South Africa, with offices in The Hague, Cape Town, Singapore, and Bogota.
Climate Investor Two (CI2) is CFM’s second blended finance facility, launched in 2019 in partnership with the European Commission and the Dutch Fund for Climate and Development (DFCD), a collaboration between FMO, SNV, WWF-NL and CFM. Designed to mobilise private capital into climate-resilient infrastructure, CI2’s investment focus includes water supply and distribution, wastewater treatment, waste-to-energy and ocean-related infrastructure. CI2’s blended finance model enables investment across the project lifecycle from development to construction. CI2 has attracted support from development finance institutions, multilateral finance institutions, public sector banks and institutional investors including asset managers, pension funds and insurers. Key investors include DFCD, the European Union, the Nordic Development Fund, KLP, IMAS Foundation, Aegon, Cambridge Associates, BNG Bank, FMO, Sanlam, SwedFund and the Green Climate Fund. Since its first close in 2021, CI2 has committed USD 267 million to 5 projects through its Construction Equity Fund, and USD 73.25 million to 20 projects via its Development Fund.
The European Union (EU) is an economic and political union of 27 European countries. It is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. It acts globally to promote sustainable development of societies, environment and economies, so that everyone can benefit. The EU has contributed €30 million to CI2 as part of the Global Gateway, the European strategy for sustainable and trusted infrastructure for people and the planet that will mobilise up to €300 billion of investments for high-quality projects globally, taking into account the needs of partner countries and ensuring lasting benefits for local communities. The total EU contribution to CFM-managed funds is EUR 178 million to date plus a EUR 205 million EFSD+ guarantee, making them the largest public investor in CFM operations.
Sanlam Investments has a global presence and offers investment solutions across multiple asset classes and geographies. We leverage strategic partnerships to create bespoke opportunities for clients, ensuring that our global reach translates into meaningful, customised investment experiences. Sanlam Alternative Investments manages Private Credit and Equity strategies and currently has in excess of USD4.5 billion under management. Our Infrastructure team focuses on investments in Power and Energy, Digital Infrastructure, Water and Sanitation and Transportation across South Africa and Africa.
