In a major move to bridge the investment gap in developing economies, British International Investment (BII), the UK’s development finance institution, has anchored a new $1 billion blended finance fund.
Announced today, Tuesday, 20 January 2026, the fund is designed to mobilize significant private capital toward climate-resilient infrastructure, healthcare, and digital connectivity across Africa, Southeast Asia, and the Caribbean.
Blended finance is a strategic approach that uses “catalytic” capital from public or philanthropic sources (like the BII) to de-risk investments for private sector players.
The biII has committed an initial $250 million as “first-loss” capital to attract an additional $750 million from institutional investors, pension funds, and commercial banks who would otherwise find emerging markets too “high-risk.” With renewable energy (solar and wind), sustainable agriculture, and expanding broadband access in underserved regions serving as focus areas.
The fund comes at a time when traditional foreign direct investment (FDI) in emerging markets has slowed due to high global interest rates and geopolitical instability.
Nick O’Donohoe, CEO of British International Investment:
“We are at a crossroads where public capital alone cannot solve the world’s most pressing challenges. By anchoring this $1 billion fund, we are creating a bridge for private investors to enter markets they have previously avoided, ensuring that economic growth in the Global South is both inclusive and sustainable.”
Targeted Regions
Africa: Nigeria, Kenya, and Ghana are expected to be primary beneficiaries of the healthcare and tech allocations.
Southeast Asia: Focusing on energy transition projects in Indonesia and Vietnam.
Caribbean: Targeted investments in climate adaptation and storm-resistant infrastructure.
Global impact investors have hailed the move as a “game-changer” for the 2026 fiscal year. Several major European pension funds have already signaled their intent to participate in the first round of private capital raising, scheduled for March.
