There has been an increased issuance of green bonds and social bonds globally and across emerging markets. Green and social bonds operate like traditional bond issuances and are income generating assets for investors.
Public equity funds dedicated to impact in emerging markets provide an accessible entry point for investors seeking liquid options. Since the introduction of the Sustainable Development Goals, there has been growth in public equity funds focused on emerging markets and impact investing.
Private debt is a large asset class in emerging markets, raising a record USD 9.4 billion in 2018. Private debt is also the largest asset class in impact investing, accounting for 37% of all investments, including both market and below market rate.
Private equity funds represent a large opportunity set for investors in emerging markets who are willing to make longer-term investments. Over the last decade, private equity penetration in emerging markets has expanded, raising over USD 100 billion annually since 2014.
Social impact bonds, which are often referred to as development impact bonds in the context of emerging markets, are a promising instrument to mobilise private capital for impactful social initiatives.