Impact Fund Denmark Closes $760 Million Blended Finance Fund to Back SDG-Aligned Businesses in Emerging Markets

Danish development finance institution Impact Fund Denmark has announced the final close of SDG Fund II, securing DKK 5 billion — around USD $760 million — in commitments for a blended finance fund dedicated to backing private-sector businesses that advance the UN Sustainable Development Goals across developing and emerging markets. The close, announced on 1 July 2026, marks one of the larger recent European mobilisations of private capital toward the SDGs.

The fund is structured as a public-private partnership, with private investors contributing 60 percent of the capital and Impact Fund Denmark providing the remaining 40 percent. Its stated purpose is to invest in the private sector to help build sustainable companies that can contribute both to the green transition and to just and inclusive development — a dual economic and environmental mandate that sits at the heart of the impact investing model.

Central to the fund's design is the mechanics of blended finance, which brings together public or philanthropic money and private capital within a common structure. The approach is intended to make otherwise hard-to-fund investments viable, particularly those carrying high perceived risk, such as early-stage climate mitigation technologies. Under SDG Fund II, private investors receive priority returns of up to 6 percent while sharing a portion of gains above a 12 percent threshold, and the fund overall targets annual returns of 12 to 15 percent. That risk-sharing architecture is what allows commercial investors to participate in markets they might otherwise avoid.

According to Impact Fund Denmark, the fund is expected to contribute in particular to SDG 5 on gender equality, SDG 8 on decent work and economic growth, SDG 10 on reduced inequalities, and SDG 13 on climate action. The investor base reflects a notable widening of appetite among mainstream Danish institutions: participants include the pension funds P+, PenSam, PKA, PFA and PBU, alongside Jyske Bank.

The fund has also secured a European Fund for Sustainable Development Plus (EFSD+) guarantee of more than €71 million, which reduces investment risk by covering potential losses on individual investments. That guarantee forms part of the EU's Global Gateway strategy to mobilise private capital for sustainable development, and it is designed to improve the risk-return profile for the institutional investors backing the fund. Impact Fund Denmark noted that the vehicle focuses on private companies that are not yet listed, reflecting the large share of economic growth in developing markets that occurs outside public equity markets.

SDG 8 (Decent Work and Economic Growth) is the primary link: SDG Fund II channels capital into unlisted private companies in emerging markets to build viable businesses and create jobs — such as the 840 new roles at Morocco's Imperium Holding, 95 percent of them held by women. SDG 13 (Climate Action) reflects the fund's green-transition mandate, visible in the new solar capacity being built by India's Radiance Renewables and the roughly 500,000 tonnes of annual CO₂ cuts expected from Sturdee Energy in Southern Africa. SDG 17 (Partnerships for the Goals) captures the fund's defining blended-finance structure, in which an EU EFSD+ guarantee and public capital de-risk investments to mobilise private pension-fund money at scale under the EU's Global Gateway strategy.

Deployment is already well underway. The fund invests across 13 developing and emerging markets, and more than DKK 1 billion — roughly $150 million — has already been committed to five companies. They include Radiance Renewables, a key player in India's green transition that will use the capital to build an additional 926 MW of solar capacity; Sturdee Energy, which develops renewable projects in Southern Africa and is expected to cut CO₂ emissions by around half a million tonnes a year; Imperium Holding, a Moroccan tea-packaging leader set to create more than 840 new jobs, 95 percent of them filled by women; Project Villeta in Paraguay, which produces green fertiliser using hydropower and displaces carbon-intensive imports from Russia and the Middle East; and Spiro, one of Africa's largest e-mobility companies, expanding electric motorcycles and battery-swap stations to cut costs for local drivers and lower emissions. The remaining approximately DKK 4 billion (about $600 million) is expected to be invested by 2028.

“Both five pension funds and now also Jyske Bank investing in the fund shows that an increasing number of private investors see the potential in combining returns with sustainable development. For us, this demonstrates that public funding can be used to mobilise private capital at scale,” said Lars Bo Bertram, CEO of Impact Fund Denmark.

For the broader European sustainable finance market, the close is a signal that blended structures — pairing public guarantees with institutional money — are becoming a credible route to channel private savings into the SDGs at scale, without asking investors to sacrifice competitive returns.

Why it matters

We have long stressed that environmental activism cannot rest on the voluntary sector alone — it has to be blended with the private sector. Funds like this one play a decisive role in steering entire industries in the right direction, showing that public money can be used to mobilise private capital rather than replace it. We hope to see more vehicles of this kind directing their efforts toward industries that, over and above being profitable, are also more environmentally friendly.