Blended Finance and Development Funding

Blended finance combines public, concessional, and private finance to make sustainable projects financially viable. This may include, among others, development bank funding alongside commercial loans, public guarantees or risk sharing mechanisms, climate funds supporting resilience infrastructure, public private partnerships (PPPs) for green port upgrades, and support for smaller ports lacking access to capital markets.

For DMC ports, blended finance can enable projects that would otherwise be unaffordable, reduce investment risk for private financiers, accelerate climate adaptation and mitigation investments, support equitable development across regions, and mobilize additional private capital.

Development finance institutions, including ADB, IFC, AIIB, JICA, and the Green Climate Fund, provide a range of blended finance instruments suited to port infrastructure.

Blended finance refers to the strategic use of public or concessional capital to mobilize private sector investment in sustainable development. Structures may include:

• concessional co investment (where a public financier provides below market terms alongside commercial capital),
• guarantees (where a public entity guarantees a portion of credit risk),
• first loss tranches (where public capital absorbs initial losses to de risk private capital), and
• technical assistance grants (supporting project preparation and capacity building).

Development-bank lending and PPPs may form part of blended-finance arrangements; their classification depends on the instruments, terms and mobilization of private capital.

In a port PPP, the public sector typically retains ownership of strategic infrastructure while a private operator provides capital investment, construction, and operational management under a long-term concession. PPP structures may incorporate development bank concessional debt, export credit agency guarantees, and private sector equity and commercial debt, distributing risk and aligning public and private incentives.

The ASEAN Catalytic Green Finance Facility (ACGF), launched in April 2019 as an ASEAN Infrastructure Fund initiative owned by ASEAN governments and ADB, provides technical assistance and access to concessional loans from cofinancing partners for green infrastructure projects that are sovereign or sovereign guaranteed (ADB, 2024).

For ports, blended finance is particularly relevant for projects with long payback periods, high upfront capital costs, and significant public benefits, such as shore power infrastructure, port electrification, inland waterway modernization, and climate adaptation investments.

Examples of development-bank finance for ports include the Port of Piraeus (Greece), where the European Investment Bank (EIB) announced EUR 140 million in 20 year backing for Piraeus Port Authority S.A. in November 2019, with an initial EUR 100 million signed and the loan guaranteed by the Export-Import Bank of China, supporting part of a total investment plan of more than EUR 600 million (EIB, 2019).

In Viet Nam, the public portion of the Lach Huyen International Gateway Port was financed by Japanese ODA loans, while a joint venture of Japanese and Vietnamese companies invested in the private portion (JICA, 2020). In 2024, IFC provided a USD 150 million financing package to SeABank in Viet Nam, including subscriptions of USD 25 million in Viet Nam's first blue bond and USD 50 million in the first green bond by a private commercial bank in the country, and AIIB invested a further USD 75 million in SeABank's green and blue bonds (IFC, 2024a; AIIB, 2024). IFC classifies the wider project as blended finance because of a proposed performance incentive of up to USD 0.48 million; this does not make the whole package concessional, and no downstream port lending has been established (IFC, 2024b).