Rapid increase of whale transactions in the realm of climate-focused financial hybridization explained
The latest State of Blended Finance report from Convergence reveals a significant shift in the climate blended finance market, with larger deals becoming the norm[1]. According to the report's lead author, Ayesha Bery, all whale transactions in 2024 were climate-focused[1].
This trend is evident in the world's largest private market investment vehicle, the Catalytic Transition Fund (CTF), which was announced by Brookfield Asset Management at COP28 and received early backing from the UAE's ALTÉRRA funds, leading to an initial close of $2.4bn[1].
The report finds that the median deal size in 2024 stood at $65m, a marked increase from the $38m median deal size between 2020 and 2023[1]. This growth in deal sizes indicates a maturing market, as blended finance projects are becoming larger and potentially more impactful.
The overall deal flow has also increased, with 123 deals in 2024 totaling close to $18 billion in financing, higher than previous years excluding 2023[1]. This growth is driven by private investor interest in climate blended finance, as institutional investors show growing conviction over the role of these funds in meeting climate solutions targets.
However, this trend occurs amidst regulatory headwinds from Washington and significant cuts to foreign aid, making blended finance more critical and also more difficult to source[1]. Convergence CEO Joan Larrea states that the report comes at a critical time, as there are unprecedented cuts to ODA and the dismantling of USAID, one of the most frequent investors in blended finance amongst official donor agencies[1].
Despite these challenges, the report suggests a growing interest in climate blended finance, with an increase in the number of deals in the $50m - $100m, $100m - $250m, and $250m - $500m ranges in 2024[1]. The report serves as a benchmark for future comparisons and offers a critical snapshot of the period before the impacts of these new challenges will be felt in the market.
Whether the momentum from 2024 carries through a turbulent 2025 remains to be seen. However, with growing investor confidence in the risk-return opportunity on offer and the synergy between their own climate solutions targets and the prospectus of climate blended finance funds, it seems that the market is well-positioned to weather these challenges.
[1] Convergence. (2025). State of Blended Finance 2025. Retrieved from https://www.convergence.org/report/state-of-blended-finance-2025
- Given the growth in the climate blended finance market, there is an increasing emphasis on environmental science, as these funds play a significant role in addressing climate change.
- As finance shifts towards investing in climate solutions, a rising number of deals worth between $50 million to $500 million in environmental-science projects indicate the appeals of blended finance funds for large-scale financing in meeting climate targets.
