WEBVTT

70c720c6-244f-4c9d-8f96-c0949de4d94e-0
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One needs to be very clear and vocal
about the fact that blending is about

70c720c6-244f-4c9d-8f96-c0949de4d94e-1
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enhancing the value proposition we're
bringing to investors,

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not only from an impact standpoint,
but also from a financial standpoint.

937f9cba-04e3-4d7c-a2d8-f8ab800f63c1-0
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Timothée,
thank you so much for being here.

208b29e0-a8f3-478e-89d4-470e9e5bb140-0
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Thinking about a just transition,
are large institutional investors

208b29e0-a8f3-478e-89d4-470e9e5bb140-1
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hesitant to enter blended finance?

65a7dfeb-aa69-4c40-955e-a9b486d5a490-0
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We've seen significant traction for
blended finance over the past five years.

fd20f6bd-01f3-47b5-82cb-faf8dbeb6d4f-0
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It's an 80% increase in terms of total
AUM raised on an annual basis.

d454a975-27b3-4791-a0c4-63d5beedad2a-0
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Having said that,
there are still some barriers we need to

d454a975-27b3-4791-a0c4-63d5beedad2a-1
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address to ensure that large investors
take into account blended finance in

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their standard allocation.

b4c326b7-4f5d-4238-9fb1-9d5ebdb2df0b-0
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Why are some investors hesitant?

02f6fce2-d5e5-45d1-b801-b0d64836799d-0
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Well,
we've seen some misconception about

02f6fce2-d5e5-45d1-b801-b0d64836799d-1
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blended finance,
one of which is the fact that they need

02f6fce2-d5e5-45d1-b801-b0d64836799d-2
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to give up risk-adjusted returns.

523b244a-82e5-4c08-aa78-8d95606f0e73-0
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That's certainly not the case for the
compelling blended finance value

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proposition we've seen in the market.

6b89c0b0-cc4e-42cd-bd1d-f79daac2d737-0
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Second reason,
which is not a misconception,

6b89c0b0-cc4e-42cd-bd1d-f79daac2d737-1
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is linked to the features that we've seen
on most blended finance structures and

6b89c0b0-cc4e-42cd-bd1d-f79daac2d737-2
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vehicles is that it's of too small size,
number one,

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and we're talking to institutional
investors with large amounts of money to

6b89c0b0-cc4e-42cd-bd1d-f79daac2d737-4
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deploy,
so they can't spend too much time on tiny

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value, tiny investment value propositions.

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The second key reason for investors
shying away from blended finance

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structures is the complexity.

7192882c-b1cf-4c2f-9fad-6a546cd3a210-0
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We haven't seen sufficient
standardization in this market and that's

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an issue for them because the transaction
costs remain very significant for each

7192882c-b1cf-4c2f-9fad-6a546cd3a210-2
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and every transaction they are looking at.
And describe the investors who are

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participating.

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The common criteria we've observed among
investors that have participated into

b63dffc6-432a-4747-88f5-b249e93b7923-1
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blended finance structure are number one,
an explicit objective to allocate part of

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their assets into climate solutions,
into some impact teams,

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into development opportunities in an
emerging market.

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So even though they do have some very
well established and clear fiduciary

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duties,
they think that by focusing on these

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teams they can really reach their
investment objectives and meet

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differential returns they are looking for.

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The second characteristic that we've
observed was that they had the resources,

128c512c-ca6b-46f1-9fce-c5e86c4f429e-1
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the governance that was fit for purpose
to really put in place the due diligence

128c512c-ca6b-46f1-9fce-c5e86c4f429e-2
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that is required before doing an
investment into a blended finance vehicle.

7f64a1f1-60a3-479c-a18b-3cc6e3dfb736-0
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What are some practical steps that asset
managers can take to lower the barriers?

2f5d40e1-1604-4391-9e72-111ac8ddd73d-0
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We see different steps that will aim to
address A,

2f5d40e1-1604-4391-9e72-111ac8ddd73d-1
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the marketing of blended finance
structure, and B,

2f5d40e1-1604-4391-9e72-111ac8ddd73d-2
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the structuring of blended finance
structure.

95bb3668-ae0f-43e2-90f2-f1fb7a0f6bb4-0
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When it comes to marketing,
one needs to be very clear and vocal

95bb3668-ae0f-43e2-90f2-f1fb7a0f6bb4-1
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about the fact that blending is about
enhancing the value proposition we're

95bb3668-ae0f-43e2-90f2-f1fb7a0f6bb4-2
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bringing to investors,
not only from an impact standpoint but

95bb3668-ae0f-43e2-90f2-f1fb7a0f6bb4-3
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also from a financial standpoint.

3ed378c6-4db2-4194-b388-bdb28f4bc336-0
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Linked to that,
the industry as a whole needs to really

3ed378c6-4db2-4194-b388-bdb28f4bc336-1
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identify what the USPs are of blended
finance instruments,

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of blended finance vehicles,
and then use these USPs on financial

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terms to really shed light on the
comparative advantages of blended finance

3ed378c6-4db2-4194-b388-bdb28f4bc336-4
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structure versus vanilla comparables.

ca3f516a-e41a-4b3d-a120-29d479a0ee47-0
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When it comes to the structuring of
blended finance instruments,

ca3f516a-e41a-4b3d-a120-29d479a0ee47-1
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of blended finance vehicles,
one needs to always bear in mind when

ca3f516a-e41a-4b3d-a120-29d479a0ee47-2
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working on scaling, simplifying,
and making sure we end up with efficient

ca3f516a-e41a-4b3d-a120-29d479a0ee47-3
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structure from an impact standpoint that
it will need to become an easy fit within

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investors' standard asset allocation.

d40210ec-0f0e-49de-9612-3993ea4545b5-0
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At the end of the day,
this investment proposition will be

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reviewed by infrastructure investment
team, by emerging market credit team,

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by fixed income developed market teams,
and so on and so forth.

fb521419-1634-43d0-928f-2ba95435c84f-0
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So we need to make sure that the
instrument of the fund we propose can

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fall within one of these existing bucket
of investments.

6f75bfcb-96e3-4f5a-9acc-bd8c99e650c1-0
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Thank you so much.