IFC and HSBC Create First $500m Green Bond Fund Focused on “Real Economy”

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The International Finance Corporation (IFC) and HSBC have joined forces to create the Real Economy Green Investment Opportunity (REGIO) Fund to catalyse at least $500 million to $700 million in multilateral and private sector capital.

The funds are intended to support well-diversified climate-smart investments in developing countries around the world—largely through green bonds issued by non-financial, or real sector, companies.

REGIO will increase access to climate finance for these borrowers by targeting a mix of manufacturing, agribusiness, services, infrastructure, and sub-sovereign bonds, in addition to a smaller allocation of financial-sector bonds.

“This innovative fund will provide new opportunities for an important class of borrowers in green bond markets,” said Philippe Le Houérou, IFC CEO. “The capital raised by REGIO will make a vital contribution to the fight against climate change and further promote sustainability-oriented capital markets.”

IFC will provide a $100 million anchor investment in the fund. HSBC will invest up to $75 million. The fund will have a total life of up to 15 years, including a seven-year investment period.

By partnering in this innovative, diversified fund solution, HSBC and IFC are sending a clear message to the market on the importance of mobilising capital needed to make meaningful progress towards achieving the UN Sustainable Development Goals.

“HSBC Global Asset Management has deep expertise and experience in investing in global emerging markets and a strong commitment to playing its part in mobilising capital to deliver on the UN Sustainable Development Goals and transition to a low-carbon global economy,” said Sridhar Chandrasekharan, Global CEO, HSBC Global Asset Management.

Since 2010, IFC – a sister organisation of the World Bank – has issued 143 green bonds in 16 currencies, totalling over $9 billion. World Bank Group’s has committed to investing and mobilizing $200 billion over five years to combat climate change and increasing climate finance to at least 35 percent of its direct financing commitments.