The International Finance Corporation (IFC), a member of the World Bank Group, sees immense opportunities to finance projects through green bonds in India especially in areas like urban transportation, waste-to-energy and water treatment. However, identifying such projects for green bonds is a challenge everywhere and India is no different.
IFC and HSBC Global Asset Management together have created the first global green bond fund targeting “real economy” issuers in emerging markets, increasing access to climate finance and promoting the further development of green bond markets. The Real Economy Green Investment Opportunity (REGIO) Fund is expected to catalyse at least $500 million to $700 million in multilateral and private sector capital 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.
Non-financial borrowers represent an untapped opportunity in the global green bond market. 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. 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. To bolster the supply of green bonds issued by real sector borrowers, REGIO’s investment activities will also be complemented by a Technical Assistance Facility, or TAF, managed by IFC.