MUFG readies $1.5bn climate blended credit platform

Managed in collaboration with FinDev Canada, the loan fund is yet to launch but has readied commitments of over $500m, according to a source.

Japanese mega-bank Mitsubishi UFJ Financial Group has lined up a $150 million commitment from Green Climate Fund for an emerging markets climate loan fund it is set to launch with development bank FinDev Canada.

The project, named GAIA, was announced earlier this year. It will focus on climate mitigation and adaptation projects in the Global South (which includes Africa, Asia and Latin America), according to a statement. In total, the platform will aim to raise $1.485 billion, and will blend commercial and concessional capital.

The fund is not yet in existence, but commitments from various parties totalling over $500 million have been already lined up, a source told New Private Markets. The fund will be a closed-end vehicle registered in Luxembourg. MUFG declined to comment on fundraising.

“I believe GAIA has the potential to redefine the landscape of climate finance,” MUFG head of global corporate & investment banking Fumitaka Nakahama said. “By addressing challenges and offering tailored solutions, GAIA is driving the transition towards a more sustainable and inclusive global economy.”

Green Climate Fund, a vehicle founded by the UN Framework Convention on Climate Change to finance projects in emerging markets, approved its commitment at a board meeting last week. The investment “recognises the strong climate adaptation elements woven into the GAIA platform,” according to FinDev Canada chief executive Lori Kerr.

With GAIA, MUFG and FinDev hope to develop a model that can be “scaled and replicated across markets”, according to MUFG’s website. The fund has a mandate to deploy 70 percent its capital in climate adaptation projects. MUFG did not respond to our request for information on the other 30 percent by press time.