IDB Readies Biofuels PE Fund (1)

The IDB is preparing a novel vehicle to target investments in the biofuels and renewable energy space. The multilateral is teaming up with private equity (PE) funds to raise up to $500m in debt and equity to help finance emerging companies in countries like Brazil, Mexico and Colombia, Daniela Carrera-Marquis, head of the financial markets division at the IDB, tells LatinFinance. The fund, which has a 10-year lifespan, is expected to be ready within a few months and the IDB has already identified projects it expects to finance. The vehicle will be composed of roughly equal portions of IDB debt capital destined for long term loans to borrowers and equity capital from PE managers and their investors. The debt financing will accompany equity provided by the fund to emerging companies in the sector, which will be subject to the IDB’s sustainable development criteria. The IDB has used a similar fund structure to allocate capital for trade finance on two separate projects, but it is entering new waters by approaching the highly sought after biofuels and sugar sector. Brazil in particular is a recipient of an aggressive flow of funds from an array of investors ranging from offshore hedge funds to local PE, as well as corporates in the energy and agriculture sectors.