Key Takeaways
- • British International Investment (BII), the UK government-backed development finance institution, is assembling a dedicated team to develop financial products that attract private capital into emerging markets.
- • The initiative responds to shrinking foreign aid budgets, pushing BII to find new channels for investor capital into developing economies.
- • BII CEO Leslie Maasdorp says many emerging markets are low-income countries that are unrated or rated single-B, and that the goal is to "build wrappers around some of these structures to make it more attractive for commercial investors."
- • BII's broader portfolio, which it describes as investing £1.5 to £2 billion annually, emphasizes blended finance as a tool for private capital mobilization.
Summary
British International Investment Plc (BII) is assembling a team to develop financial products capable of attracting private capital, according to Bloomberg. The move reflects a strategic shift as the development finance institution looks for new ways to channel investor cash into emerging markets at a time when foreign aid is declining.
BII Chief Executive Officer Leslie Maasdorp explained the challenge facing the institution. "A lot of emerging markets are often low-income countries that are either unrated or they've got single-B ratings," Maasdorp said. The credit profiles of these markets often limit access for commercial investors, which is the gap the new structures are intended to close.
The aim, as Maasdorp described it, is "to build wrappers around some of these structures to make it more attractive for commercial investors." Wrapper structures typically package underlying development assets in a form that addresses risk and return expectations of private investors, though the primary source does not detail the specific instruments under consideration.
BII, which describes itself as the UK's development finance institution and impact investor backed by the UK Government with over 75 years of experience, has long emphasized blended finance as a means of mobilizing private capital. The institution states that it invests between £1.5 and £2 billion each year in green infrastructure, technology and other sectors. The new deals team extends that strategy toward products designed specifically for commercial capital.
BII Chief Executive Officer Leslie Maasdorp explained the challenge facing the institution. "A lot of emerging markets are often low-income countries that are either unrated or they've got single-B ratings," Maasdorp said. The credit profiles of these markets often limit access for commercial investors, which is the gap the new structures are intended to close.
The aim, as Maasdorp described it, is "to build wrappers around some of these structures to make it more attractive for commercial investors." Wrapper structures typically package underlying development assets in a form that addresses risk and return expectations of private investors, though the primary source does not detail the specific instruments under consideration.
BII, which describes itself as the UK's development finance institution and impact investor backed by the UK Government with over 75 years of experience, has long emphasized blended finance as a means of mobilizing private capital. The institution states that it invests between £1.5 and £2 billion each year in green infrastructure, technology and other sectors. The new deals team extends that strategy toward products designed specifically for commercial capital.
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