JOHANNESBURG - UK development finance institution British International Investment (BII) said on Tuesday it ‍would provide $40 million ‍for a new $1 billion blended finance fund managed ​by Allianz Global Investors, aimed at boosting climate investments in ⁠emerging markets.

The Allianz Credit Emerging Markets (ACE) fund has so far secured $690 ⁠million in ‌commitments and was launched on Monday in London, the BII and Allianz said in a statement.

Development ⁠finance institutions such as BII and multilateral lenders will provide $150 million in concessional capital to cover initial losses, while private investors are expected to contribute up to $850 ⁠million.

If successful in reaching ​its $1 billion target, ACE would be among the largest blended finance vehicles created ‍to date.

Blended finance, which combines public and private capital to tackle ​development challenges, has attracted renewed interest as governments and development lenders attempt to close the multi-trillion-dollar gap in global climate financing.

However, reviews by the OECD and the World Bank have raised concerns about its complexity and dependence on concessional public funds, with actual mobilisation volumes falling short of what is required.

The fund plans to target investments across emerging economies, allocating ⁠roughly 40% of disbursements to ‌Africa, significantly above typical levels for similar funds, the statement said.

Other regions will share the remaining allocation, with key sectors ‌including renewable ⁠energy, clean transportation, agriculture and financial services.

(Reporting by Karin Strohecker ⁠and by Colleen Goko; Editing by Kirsten Donovan )