The Green Guarantee Company welcomes the Green Climate Fund as founding equity shareholder
November 11, 2022, London – The Green Climate Fund has approved an equity investment in the Green Guarantee Company – the first ever global guarantor dedicated to providing guarantees for climate bonds in developing countries, in a move set to significantly expand access to climate finance.
The Green Climate Fund’s investment is being undertaken in partnership with MUFG Bank, Ltd as Accredited Entity and the Development Guarantee Group, part of Cardano Development, as Executing Entity. It was approved during the recent 34th meeting of the Green Climate Fund Board in Songdo, Republic of Korea. The move came just before the start of COP27 where boosting access to finance for developing nations is a key area of focus.
The Green Guarantee Company aims to plug a key financing gap. According to the United Nations developing countries require circa USD 500 billion of investment every year to meet their climate adaptation and mitigation infrastructure needs. But large climate projects struggle to attract affordable financing. The Green Guarantee Company will act as an advocate for developing countries in global capital markets working to help climate projects gain access to affordable long-term financing from international investors thanks to its guarantees.
The Green Climate Fund will be one of the founding equity shareholders of the Green Guarantee Company and will initially invest USD 40.5 million with further investments of up to USD 82.5 million as the Green Guarantee Company scales up. The Foreign, Commonwealth and Development Office (FCDO) is providing technical assistance support to the Green Guarantee Company. This is administered through the UK government’s flagship programme – Mobilising Institutional Capital Through Listed Product Structures (MOBILIST), which supports investment solutions that help deliver the Global Goals for Sustainable Development and the climate transition.
The Green Guarantee Company will provide guarantees to mobilise more than USD 1.6 billion of climate finance in the Green Climate Fund’s Host Countries – leveraging the Green Climate Fund’s investment more than twentyfold. These bonds will finance climate adaptation projects such as flood protection and climate mitigation projects such as electric buses or renewable energy.
Yannick Glemarec, Executive Director of GCF, said, “GCF is proud to be a founding shareholder of the Green Guarantee Company. This innovative company represents an opportunity to mobilise critical funds from global investors and will be a powerful ally for developing countries by giving them greater access to international capital markets for climate finance.”
Koichiro Oshima, Managing Executive Officer, Head of Financial Solutions Group, MUFG Bank, Ltd., said, “Establishment of the Green Guarantee Company is a landmark for the GCF’s private sector agenda. GGC sets a high standard in terms of financial additionality, leveraging GCF’s contribution many times through the global capital markets, while ensuring maximum climate additionality and long-term impact. MUFG is proud to be a partner in this strategic GCF transaction.”
Lasitha Perera, Managing Partner of the Development Guarantee Group, said, “An essential quality of a guarantor is its ability to inspire confidence. Consequently, the Green Climate Fund, as a founding shareholder, will help ensure and build confidence in the climate impact of the Green Guarantee Company. The Development Guarantee Group, as the manager of the Green Guarantee Company, looks forward to working with the Green Climate Fund to deliver on the significant potential of global capital markets to help developing countries in their fight against climate change.”
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ABOUT DEVELOPMENT GUARANTEE GROUP
The Development Guarantee Group was founded by Lasitha Perera and Boo Hock Koo, with Cardano Development as an institutional shareholder, thereby uniting the collective experience of a global network of experts in setting up and running guarantee companies and programmes focused on addressing development challenges globally. The Development Guarantee Group is the world’s first dedicated guarantee platform with the mission to design, develop and operate guarantee solutions and companies that can effectively mobilise private sector capital towards funding development and sustainability challenges. The Green Guarantee Company is the Development Guarantee Group’s first company under management.
ABOUT CARDANO DEVELOPMENT
Cardano Development (CD) is an incubator and fund manager, established in 2007. Through careful risk-management analysis in data-poor settings, CD identifies scalable solutions that help to make frontier financial markets more inclusive, investible, and sustainable to unlock lasting economic value. CD creates solutions for local currency, credit, and liquidity risks in these markets. With over USD 6 billion assets and USD 3.1 billion capital under management, CD supports its scale-up funds and a number of start-ups with ongoing management services, financial support and corporate governance oversight. Cardano Development works with reputable partners including foundations, governments, impact investors, institutional investors and commercial partners.
COMMUNICATIONS CONTACT
Maria-Pia Kelly – Communications Manager