Climate Fund Managers (CFM) has closed its Climate Investor Two (CI2) fund at US$1.065 billion, surpassing its US$1 billion target to become the largest climate adaptation infrastructure fund focused on emerging markets.
The fund’s blended finance structure – which combines public and private capital – is designed to direct funds toward water, waste, and oceans infrastructure serving low-income countries across Africa, Asia, and Latin America.
The fund aims to provide safe drinking water and improved sanitation to 16.5 million beneficiaries and protect or restore 2.2 million hectares of ecosystems.
It uses a pioneering ‘bridge-to-bond’ mechanism facilitated by Sanlam Investments. The facility’s structure includes a bridge loan supported by a guarantee from the European Commission, which will be subsequently replaced by a climate bond. According to CFM, the mechanism creates a pathway for fixed income markets to access CI2’s underlying asset base, helping to mobilise funds from institutional bond investors.
The fund is supported by development finance institutions, multilateral finance institutions, public sector banks and institutional investors, including asset managers, pension funds and insurers.
The United Nations estimates the annual adaptation finance gap in developing countries at US$194–366 billion.
“While climate mitigation remains critical in the race to end the climate crisis, adaptation must be an equal priority. Closing CI2 in a challenging environment is a major milestone that highlights investor appetite for adaptation,” said Andrew Johnstone, CEO of CFM.
Established in 2015, CFM is a joint venture between Dutch development bank FMO and Sanlam InfraWorks, part of the Sanlam Group.
