CAF, FinDev Canada and IDB Invest strengthen their commitment to climate action in Latin America and the Caribbean by supporting the region’s first private credit climate finance fund

Canada’s Development Finance Institution, FinDev Canada, and IDB Invest have each signed an up to USD 50 million commitment to DIC Latin American Fund IV, L.P. (Darby IV), the first private credit climate finance fund in Latin America and the Caribbean (LAC). CAF, Development Bank of Latin America and the Caribbean, committed for USD 15 million. 

Darby IV is a 10-year, climate-focused debt fund with a target size of USD 400 million, managed by Darby International Capital LLC, a leading emerging markets private debt investor. The Fund will earmark at least 40% of invested capital to climate finance transactions, while also providing portfolio clients with guidance on capacity building to identify and mitigate climate risks, which will enable businesses and projects to better adapt to the effects of climate change.

The commitments from FinDev Canada, IDB Invest and CAF mobilize both development finance and private institutional capital to support the provision of tailored long-term growth financing to underserved mid-sized enterprises for low carbon and climate-resilient operations throughout the region. It will also help the Fund to foster economic growth, job creation and sustainable development within this crucial but often overlooked mid-market segment. 

“With this transaction, FinDev Canada emerges as a meaningful partner to an experienced fund manager in its inaugural climate focused fund, which offers a great opportunity to continue to support climate action in the region,” Paulo Martelli, VP and Chief Investment Officer at FinDev Canada, declares.

“Climate investments to mitigate and adapt to climate change are an integral part of IDB Invest’s strategy for LAC, we are honored to support the first private credit climate finance fund in the region,” Marisela Alvarenga, Managing Director, Financial Institutions at IDB Invest says

“This investment is aligned with the strategic objectives of CAF in order to consolidate Latin America and the Caribbean as a region that contributes substantially to reverse climate change and its effects, through greener and more sustainable investments in our countries,” declares Jorge Arbache, Private Sector Vice president at CAF.

The Fund manager has a strong regional presence, established brand and a track record of demonstrating a substantial impact in its target regions. Through the manager’s extensive experience and strategic market positioning, the Fund will also support market development and improve access to financing for mid-sized companies that encounter challenges in sourcing affordable long-term expansion capital, promoting growth and creating formal employment opportunities in the region.