The GAIA Climate Loan Fund, co-founded by MUFG Bank, FinDev Canada and the Green Climate Fund, announced that it has raised $600 million in commitments at its first close, with proceeds to be used to fund loans primarily for climate adaptation projects in climate-vulnerable markets.

The new fund is managed by climate-focused blended finance investment manager Climate Fund Managers (CFM) and supported by climate and nature-focused advisory firm Pollination. According to the investors, the fund aims to benefit 19 million people, support 11,000 jobs, avoid 30 million tonnes of CO₂ emissions annually and enhance the climate resilience of 5,000 km² of natural resources.

The GAIA fund uses a blended finance structure that combines public and private investment, with public funding deployed strategically to reduce risk and mobilize private capital. The fund will provide long-term loans to sovereign, sub-sovereign, quasi-sovereign and state-owned entities, including municipalities, development banks and state-owned utilities. At least 70% of the capital will be dedicated to climate adaptation, targeting areas such as sustainable agriculture, water management, ecosystem resilience and climate-smart infrastructure, while the remaining capital will support mitigation projects such as renewable energy and low-carbon transport.

According to the investors, the new fund comes as the impacts of climate change fall most heavily on developing and emerging economies that lack the infrastructure and resources to withstand events such as floods, droughts and extreme heat, while public funding needed to build climate resilience is often constrained by limited budgets and competing priorities, while the new initiative aims to tackle these challenges using a blended finance model to unlock institutional capital, and address the shortage of financing for infrastructure most exposed to climate risk.

The companies said that at least 25% will be deployed in Least Developed Countries (LDCs) and Small Island Developing States (SIDS), where financing needs are greatest.

The fund targets a total size of $1.48 billion, with final close anticipated in 2027. Cornerstone investments have been secured from MUFG, FinDev Canada and Green Climate Fund, with MUFG serving as origination partner.

Christopher Marks, Head of Growth Markets, Innovative Finance & Portfolio Solutions, EMEA, at MUFG, said:

“Achieving first close of GAIA is a major milestone in our ambition to help bridge the climate finance gap through an innovative public-private platform. As origination partner, MUFG will leverage its global network to source high-impact projects that improve lives and livelihoods in developing and emerging economies.”