This investment in the US$538mn HSBC Real Economy Green Investment Opportunity (“REGIO”) fund makes Proparco one of its three founding investors. REGIO will invest in green bonds issued by private companies based in emerging countries in Asia, Africa and Latin America.
The Green Bond market is today still mainly an active market for investors and issuers in developed countries, but rarely in emerging countries, despite the huge financing needs in these countries and the demand for green assets from investors in OECD countries. REGIO is the second fund dedicated to green and sustainable bonds in emerging markets, after Amundi Planet*, and the first dedicated to the private sector in emerging countries.
REGIO will thereby contribute to filling this gap by mobilizing financial flows from private investors in developed countries, which have invested over 60% of the funds in REGIO for “green” projects implemented by private companies in emerging countries. REGIO will thereby promote access to capital markets for local issuers by providing a new range of financing for private projects that contribute to the achievement of the Sustainable Development Goals.
Over the next seven years, the fund will target projects that will support the ecological transition and develop new sustainable networks and infrastructure (energy, transport, water and sanitation…), while promoting the transfer of technologies in these countries.
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HSBC Asset Management, specialised in emerging countries, will be the fund manager and IFC, the World Bank’s subsidiary, will provide technical assistance to advise the future issuers and boost the green bond market in emerging countries.
For Grégory Clemente, CEO of Proparco, “This investment confirms our commitment to mobilize private finance to fight against climate change and accelerate the energy transition. This innovative project will contribute to rechanneling financial flows from OECD countries towards green projects in the South. The mobilization of institutions like PROPARCO also attracts investors that are less familiar with the risks on these markets associated with these geographical areas.”