Taking Stock of MDB and DFI Innovations for Mobilizing Private Capital for Development

To support the 2030 Agenda, MDBs and DFIs have been asked to mobilize more private capital alongside their own investments in private firms. Mobilization volumes to date remain small, but progress has been made in developing new models that can attract different types of private investors at greater scale. From an historic focus on transaction-level mobilization from commercial banks, and issuing bonds to institutional investors, MDBs and DFIs have broadened the range of financial structures they use, and broadened the range of investors that they mobilize capital from, including institutional investors. Innovation and experimentation have occurred both at the level of individual transactions and at the level of portfolios of assets. Scaling up multi-asset mobilization involves a shift in business model from “originate to hold” to “originate to share.” To further implement this model, MDBs and DFIs need to increase their capacity to originate assets, standardize asset terms and documents, pool assets in shared vehicles, share risk data, and be more strategic about selling assets. DFIs that do not currently do so can also mobilize private capital by issuing bonds.