Green Finance Catalyzing Facility – Structured Finance Mechanism and On-Lending Design
People’s Republic of China, 2018
Client: Asian Development Bank
Role: Financial Specialist
Project Background and Objectives
The Green Finance Catalyzing Facility (GFCF) is a pioneering blended finance initiative developed by the Asian Development Bank to address the People’s Republic of China’s substantial financing gap for green infrastructure. The facility is designed to leverage concessional public funds to catalyze private, institutional, and commercial (PIC) finance into environmentally sustainable infrastructure projects, supporting China’s transition toward an ecological civilization and low-carbon development pathway .
The GFCF adopts a project-centric approach to green finance, focusing on proactively generating a pipeline of bankable green projects rather than relying solely on the balance sheets of project sponsors. The facility is structured to evolve over multiple tranches, progressively increasing financial sophistication, greening ambition, and leverage ratios, with a long-term objective of accessing capital markets.
SIET’s Role and Services
SIET provided structured finance and blended finance advisory support to the ADB project team, focusing on the institutional and financial architecture of the GFCF and its associated provincial green development fund. The scope of services included:
- Advisory input to the design of GFCF on-lending mechanisms, including principles for transitioning projects toward financial bankability
- Development of leverage and risk-sharing structures, including caps on concessional finance, phased leverage ratios, and risk mitigation linked to construction and early operation stages
- Support to the definition of eligibility criteria for green infrastructure projects, including lifecycle-based greening and value-for-money considerations
- Advisory support on institutional and vehicle structures to enable portfolio-level financing, pooling of projects, and future access to capital markets
- Input to the design of fund-raising strategies, including concessional sources, donor funding, sovereign lending, and future private and institutional capital participation
- Engagement with local governments, financial institutions, and potential investors to refine the facility’s structure and implementation roadmap
Outcomes and Value Added
SIET’s contribution helped translate high-level green finance policy objectives into practical, implementable financial mechanisms. By focusing on bankability, risk mitigation, and structured leverage, the assignment strengthened the credibility and scalability of the GFCF as a blended finance platform capable of mobilizing significant private capital into higher-risk green infrastructure projects.
The advisory support contributed to the development of a phased financing roadmap, enabling the facility to evolve from concessional project financing toward pooled portfolios and capital-market-ready structures. This work enhanced the replicability of the GFCF model and supported ADB’s broader objective of institutionalizing innovative green finance mechanisms in the PRC.