What is blended finance?

Blended finance involves public institutions, such as multilateral development banks and development finance institutions (DFIs), reducing risks in projects to attract private capital from companies, banks, and institutional investors. Through guarantees, initial financing, or risk-sharing, these public actors make it possible to realize more long-term investments, even in challenging markets.

SEK’s role in blended finance

As a state-owned financial institution, Svensk Exportkredit (SEK) holds a unique position in blended finance. SEK provides both financing and management of sustainability-related risks to support international projects with high societal benefit. Public funds here function not only as risk mitigators but also as a strategic catalyst that signals quality and credibility. This quality stamp attracts private investors, enabling scalable, long-term solutions.

This is particularly important in growth markets, where stable and reliable financing can help reduce the sustainability risks that often deter private investors.

Longer and flexible repayment terms for sustainable projects

The latest update to the OECD Export Credit Agreement, which allows for longer repayment periods for green projects (up to 22 years), opens up new possibilities for long-term investments. This is especially important for investments in infrastructure and renewable energy, where the economic lifespan is long, and cash flows can be uneven at the beginning. To facilitate such investments, flexible financing structures are needed to adapt to the projects and their specific cash flows.

In this context, actors like SEK play a crucial role by offering both financing and risk management for sustainable projects, particularly in growth markets, where there is a strong need for stable and long-term financing. By combining public and private funds, risks can be minimized, and more long-term investments can be realized, making it easier to attract private capital to projects with significant societal impact.

Challenges and future opportunities

Blended finance has the potential to address global challenges but requires careful structuring to appeal to both public and private actors. For SEK and similar institutions, climate-focused blended finance products are an increasing priority, with the green transition at the center.

A unique opportunity ahead

Blended finance offers a model where public and private funds come together to manage risk and enable scalable, sustainable projects. SEK’s engagement creates the conditions to realize initiatives that contribute to both global sustainability and development in growth markets.