Blended finance: private capital + DFI funding, one structure

Blending private capital with development finance

Blended finance combines commercial investment with development finance — the IDC, SEFA, NEF, Land Bank and DBSA domestically; the IFC, BII, DEG, Proparco and AfDB continentally — in a single capital structure. Done well, it lowers the blended cost of capital, extends tenor, and funds businesses conventional capital under-serves. Done badly, it stalls in eighteen months of misaligned processes. The difference is structuring. For the wider context, see our explainer on What are DFIs? Development finance in Africa explained.

How a blended structure actually works

A typical Caban blended package layers three instruments: DFI or development debt at concessional pricing against the developmental mandate (jobs, localisation, energy, inclusion); private equity or mezzanine carrying commercial risk and return; and where applicable, grant or first-loss capital absorbing early risk. Each funder underwrites to its own mandate; the structure makes the mandates compatible. Caban prepares the application to each funder's standard and manages the process to disbursement.

Who blended finance suits

• Asset-heavy growth businesses — manufacturing, energy, logistics, agri-processing — where DFI debt against assets transforms the economics.
• Impact-aligned companies — healthcare, housing, inclusion — whose outcomes unlock developmental mandates.
• Mid-market expansions — R10 million to R100 million-plus requirements where no single funder covers the full need.

Caban has structured funding across private and development capital since 2012, and our research desk's forthcoming paper, Blended Capital for African Healthcare, documents the structures at work. If your expansion sits between what banks will lend and what equity should cost, blended finance is usually the answer — and preparation is usually the gap.