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Blended finance refers to a combination of financing to meet the needs of for-purpose organisations ? for example, part debt and part grants. It is a structuring approach that typically sees impact investors with different expectations coming together to provide capital to impact investing deals.

Blending uses concessional finance (i.e. a subsidy) to reduce the perceived risk of an investment, thus attracting additional finance for development (i.e. the subsidy is used to absorb a share of the risks).

Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries. It attracts commercial capital towards projects that contribute to sustainable development, while providing financial returns to investors.

To rapidly scale up blended finance for climate adaptation and mitigation there is a need to design and employ financial instruments and vehicles that can properly align incentives in both the public and private sector and entice private capital with varying appetite for risk.

The most common forms of company-level blended finance are equity investments, below-market loans or local currency loans, as well as credit guarantees for the repayment of principal and interest on corporate loans or bonds.

The term 'leverage ratio' refers to a set of ratios that highlight a business's financial leverage in terms of its assets, liabilities, and equity. They show how much of an organization's capital comes from debt ? a solid indication of whether a business can make good on its financial obligations.

Benefits of Blended Finance By leveraging public and philanthropic funds, blended finance incentivizes private investors to participate in projects that contribute to social and environmental outcomes, bridging the financing gap and increasing the overall pool of available resources.

The study found that, on average, blended finance funds have leveraged $4 of commercial capital for every dollar of concessional capital, with only a fraction of this commercial capital ($1.10) coming from private sector investors.