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By Manfred Schepers
In this context, after leaving the EBRD in 2016, I embarked on a mission to create ILX, which, in early 2022, launched the ILX Fund I, a US$ 1.05 billion Sustainable Development Goal (SDG)- and Climate-focused emerging-market private debt fund. APG, Europe’s largest pension fund manager, was the cornerstone investor, with an initial commitment of US$ 750 million.
The establishment of ILX was supported by grants from the German, UK and Dutch governments, as ILX’s mission is in Iine with their policy objective of supporting the mobilisation of private institutional capital to emerging markets and developing economies. The fund gives institutional investors access to opportunities in development finance at scale, by investing in private-sector loans arranged by multilateral development banks (MDBs) and development finance institutions (DFIs). The ILX Fund I investments currently includes 27 investments in 14 countries in Asia, Africa, Eastern Europe, SEMED and Latin America. B-loan have been done with the ADB, FMO, IDB-Invest, IFC and is one of the EBRD's largest co-financing partners. In addition, the fund has contributed to 2,005 MW of additional renewable energy generation capacity and some 3.3 million tCO2e of annual expected avoided emissions and supported 34,754 direct and indirect jobs.
Partnering with all the MDBs and DFIs enables ILX to directly access highly impactful projects that help close the SDG and climate-funding gap, whilst benefitting from their unique status, reputation and resources.
For example, we recently financed, alongside the EBRD, the extension of a metro line in the city of Izmir in Turkey. This extension results in safer and more reliable transport services for many passengers, while reducing traffic congestion and noise pollution and replacing high-carbon modes of transport. It will also provide access to jobs in a part of the city that currently has little access to employment.
However, impact is not the only thing we offer our investors. The development finance asset class provides a scalable investment opportunity with compelling market-equivalent risk-adjusted returns and diversification, particularly compared with traditional sovereign and corporate emerging-economy bond markets.