Big deal: why ‘whale’ deals are on the rise in climate blended finance

Brookfield Asset Management’s announcement, at COP28, of its Catalytic Transition Fund (CTF) was noteworthy for several reasons. The fund, targeted at climate solutions in emerging markets, received early backing from the UAE’s ALTÉRRA funds: the world’s largest private market investment vehicle.

ALTÉRRA paved the way for institutional investors to cash in. CDPQ, GIC, Prudential and Temasek invested in CTF in September 2024. The capital raise led Brookfield’s blended finance fund to an initial close of $2.4bn.

Deals of this scale – that exceed the $1bn mark – are on the rise in climate blended finance. That is according to the latest State of Blended Finance report from Convergence, a global network for blended finance.

Big deal

The report finds that deal sizes are getting larger. Between 2020 and 2023 – median deal size was $38m. In 2024, that number stood at $65m.

Whale deals are a key characteristic of this trend. Over the past three years, these deals have accounted for 27% of the blended finance market’s total financing. The upward trajectory of deal sizes, the report notes, reflects a structural shift toward fewer and larger investment vehicles.

A shift, that is driven by private investor interest in climate blended finance.

“The increase in deal size is bolstered by an interest from private investors in climate blended finance; all whale transactions in 2024 (consisting of two funds and one project) were climate-focused”, says Ayesha Bery, associate director at Convergence and report’s lead author.

Investor interest

What seems to be drawing investors in, is the synergy between their own climate solutions targets and the prospectus of climate blended finance funds.

“The growing presence of whale deals in climate finance demonstrate the appeal of blended finance as a strategy for investors to meet their climate goals, particularly through funds (with 64% of funds focused on climate mitigation or adaptation)”, Bery told Net Zero Investor.

Additionally, the scale of whale deals is a vital component of their appeal to an institutional investor's risk appetite.

“Large funds provide a number of benefits to institutional investors; they have larger ticket sizes, are easier to scale and replicate, and have a diverse portfolio, therefore reducing risk”, Bery adds.

Benchmark

Even beyond whale deals, the Convergence report finds evidence of market momentum. The number of deals in the $50m - $100m, $100m - $250m and $250m - $500m range, all increased in 2024.

The buoyant momentum of blended finance in 2024 comes amidst gusty regulatory headwinds from Washington.

“This report comes at a critical time as we see unprecedented cuts to ODA across the board and the dismantling of USAID, one of the most frequent investors in blended finance amongst official donor agencies”, says Convergence CEO Joan Larrea. 

“This current report looks at data from 2024 and will not reflect the impacts of these new challenges, which will no doubt be felt in the market this year and beyond. Instead, it offers a critical snapshot of the period before and will be the year against which the future will be benchmarked”, she notes.

The rising popularity of whale deals in 2024 points toward investor confidence in the risk-return opportunity on offer. It also reflects growing conviction within institutional investor circles over the role of blended finance funds in meeting climate solutions targets.

However, this year's numbers could differ from the last. Whether the momentum from 2024 carries through a turbulent 2025, time will tell.