Allianz Global Investors has reached a significant milestone in climate finance with the first close of its new emerging markets credit strategy, raising $690 million in commitments toward a targeted fund size of $1 billion. The strategy is designed to mobilise large-scale private capital in support of the goals of the Paris Agreement while accelerating progress toward the UN Sustainable Development Goals.

The fund, known as the Allianz Credit Emerging Markets strategy, reflects growing investor interest in channeling capital into climate and development priorities beyond advanced economies. AllianzGI has indicated that it expects to reach its $1 billion target by the final close, positioning the strategy as one of the larger private credit vehicles focused specifically on climate-related investment in emerging markets.

Structuring Private Capital for Higher-Risk Markets

At the core of the strategy is a blended finance structure that combines public or philanthropic capital with private investment within a single framework. This approach is intended to address one of the central barriers to climate investment in emerging markets: the perception of elevated risk. By using blended finance, the strategy enables participation in sectors and technologies that might otherwise struggle to attract institutional capital, including newer climate mitigation solutions.

Under this structure, Development Finance Institutions and Multilateral Development Banks provide junior capital that absorbs first losses. This layer of protection reduces volatility for senior investors and improves the overall risk-return profile, allowing institutional and professional investors to participate at scale while remaining within their risk mandates.

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Emerging Markets as a Climate and Growth Opportunity

Ludovic Subran, Chief Investment Officer at Allianz, described the first close as a turning point in the firm’s efforts to deploy blended finance at scale. He emphasised that emerging markets offer substantial potential for both climate impact and long-term value creation, and that careful structuring is essential to unlocking that potential in a way that is attractive to private investors.

The strategy is expected to invest in a diversified portfolio of private debt instruments across low-carbon sectors. Target areas include clean energy, climate-smart agriculture, sustainable infrastructure, selected manufacturing activities, and financial institutions that support the low-carbon transition. Geographically, the fund will focus on emerging markets across Africa, Latin America and the Caribbean, as well as the Asia-Pacific region.

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Public-Private Collaboration at Scale

Edouard Jozan, Head of Private Markets at Allianz Global Investors, highlighted the importance of directing climate capital beyond developed economies. He noted that addressing climate change requires a global allocation of investment, particularly in regions where emissions growth, infrastructure needs, and development priorities intersect. The strategy, he said, demonstrates how collaboration between public and private actors can unlock significantly larger pools of capital.

The first close includes anchor commitments from Allianz and the Swiss pension fund GastroSocial Pensionskasse. On the junior tranche side, participation includes support from Global Affairs, British International Investment, and Inter-American Development Bank Invest. Their involvement provides the risk-sharing foundation required to attract institutional capital at scale.

As global climate finance discussions increasingly focus on mobilising private investment for emerging markets, AllianzGI’s strategy offers a practical example of how blended finance structures can bridge the gap between public objectives and private capital deployment, without diluting financial discipline or long-term return expectations.

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