By Simon Jessop and Karin Strohecker LONDON, April 23 (Reuters) - Britain's development finance institution is looking to drive 15 billion pounds ($20 billion) of investment into climate and other
Britain’s BII Plans $20 Billion Investment Drive with Private Capital Push
By Simon Jessop and Karin Strohecker
BII’s Ambitious Investment Strategy and Private Sector Mobilization
LONDON, April 23 (Reuters) - Britain's development finance institution is looking to drive 15 billion pounds ($20 billion) of investment into climate and other projects over the next five years by ramping up private sector involvement, its chief executive told Reuters.
Direct Investment and Leverage of Private Capital
British International Investment, which helps developing economies reduce poverty and respond to global warming, will directly invest up to 8 billion pounds of its own capital - a level broadly in line with the lower end of the target range from its previous five-year plan.
Private Sector Involvement and Capital Mobilization
However, for every pound that UK government-owned BII invests, it aims to draw in another pound from private investors such as insurers, pension funds and asset managers — about 40% more than in the previous period, BII CEO Leslie Maasdorp said.
Shifting Business Models Amid Declining Government Aid
The push to draw in more private capital comes as international development institutions face growing pressure with richer countries, including Britain, slashing official development aid, in part to bolster spending on defence.
"Everyone in (the) G7 is faced with declining capital injections from the government because they need to spend more on defence. That has led to... the rejigging of the business model towards private capital injections," Maasdorp said.
"In the past it was nice to have private capital mobilisation - now it is an essential."
Development Aid Trends and Risk Mitigation
OECD data released earlier this month showed a record drop in overseas development aid from the world's richest nations, including the UK, to poorer countries.
Development finance investors such as BII seek to encourage more private sector investment by, for example, offering to take on more of the risk that a project may fail.
New Initiatives and Focus Areas
British Climate Partners Initiative
Alongside the launch of its new strategy, BII - whose mandate stretches from Africa to Asia and the Caribbean - also unveiled another 1.1 billion pound initiative, British Climate Partners, that aims to help countries such as India and Vietnam reduce their reliance on coal.
Investment in Least Developed Countries
BII also aims to direct at least a quarter of all new investments by value towards countries classified by the United Nations as Least Developed Countries, such as Sudan, Uganda, Bangladesh and Cambodia.
The countries are among the most exposed to the physical risks of climate change.
Climate-Focused and Gender-Inclusive Investments
The share of new investments going towards climate-focused projects over the coming five years was set to increase to 40% from 30% in the previous period, while those focused on supporting women would rise to 30% from 25%, the BII said.
Sectoral and Market-Wide Development
It will also seek opportunities to develop a wider sector or market rather than just a single company, in areas including financial services, power, trade and digital infrastructure.
($1 = 0.7396 pounds)
(Reporting by Simon Jessop)
