Signing of Investment Agreement for the “Project for Climate Change Investment Promotion” in Brazil (Private Sector Investment Finance): Supporting emerging companies in Brazil that contribute to climate solutions through investments in climate solution funds
On May 31, the Japan International Cooperation Agency (JICA) signed an investment agreement with the GEF LatAm Climate Solutions Fund III in the Federative Republic of Brazil, managed by GEF Capital Partners, LLC (GEF Capital) and, on June 12, a ceremony was held to commemorate the signing. JICA's investment will be used to fund companies that pursue climate change solutions in Brazil. This project is a co-investment between JICA and other development finance institutions such as PROPARCO (a subsidiary of the French Development Agency), the U.S. International Development Finance Corporation (DFC), and the European Investment Bank (EIB).
Brazil has the largest GDP in Central and South America and the 12th largest in the world. Regarding Greenhouse Gas (GHG) emissions, the country ranks fifth largest globally, which equates to a 3.9% (2.4Gt) share of world emissions (2019). In 2022, Brazil updated its National Determined Contribution, and has committed to Net Zero GHG emissions by 2050. Businesses related to the climate change sector have high potential for future growth in Brazil, as well as huge financing needs. However, due to uncertainty about the economic outlook in regards to the recent rise in dollar interest rates and international developments, unlisted companies in the Private Equity (PE) market still face major difficulties in raising capital.
The GEF LatAm Fund III—a pioneer PE fund in the climate solution sector of Brazil with a high level of expertise—targets the renewable energy, agriculture, and urban solution sectors as its primary form of investment in the country.
Through JICA’s cooperation in this fund, in collaboration with other development finance institutions, the project aims to promote climate solution investment in Brazil, and to stimulate private sector financing for climate solution businesses. This project will therefore contribute to SDGs (Sustainable Development Goals) Goals 13 (Climate action) and 17 (Partnership for the goals).