Rapid increase in 'whale' transactions observed in climate-focused financial combinations: insight provided
Over the past few years, large-scale, high-impact investments, often referred to as 'whale deals', have become a prominent feature in the climate blended finance sector. According to the latest State of Blended Finance report by Convergence, the median deal size between 2020 and 2023 was $38m, increasing to $65m in 2024, and deals exceeding $1bn are on the rise.
The report, which serves as a benchmark for future comparisons, also shows an increase in the number of deals in the $50m - $100m, $100m - $250m, and $250m - $500m range in 2024. This upward trajectory of deal sizes reflects a structural shift toward fewer and larger investment vehicles.
The appeal of whale deals to institutional investors is due to their larger ticket sizes, ease of scaling and replication, and diverse portfolios, which reduce risk. The synergy between investors' own climate solutions targets and the prospectus of climate blended finance funds seems to be drawing investors in.
For instance, in September 2024, CDPQ, GIC, Prudential, and Temasek invested in CTF, the world's largest private market investment vehicle, which was announced by Brookfield Asset Management at COP28, targeted at climate solutions in emerging markets. The UAE's ALTÉRRA funds provided early backing for CTF.
The rising popularity of whale deals in 2024 indicates investor confidence in the risk-return opportunity on offer in climate blended finance. However, the report does not reflect the impacts of the current regulatory headwinds from Washington, which will likely be felt in the market this year and beyond.
Institutional investors are responding to this trend by engaging in structured, de-risked platforms and are increasingly vocal about the need for scale, standardization, and measurable impact. There is a shift toward impact investment and sustainability-linked finance, with institutional investors looking for both financial returns and measurable environmental outcomes.
The continued interest in blended finance models (combining public, philanthropic, and private capital) to de-risk and scale climate investments, especially in the Global South, is another response from institutional investors. These platforms are designed to attract larger investors through partial guarantees, first-loss provisions, and outcome-linked returns—mechanisms that can enable whale deals by reducing perceived risk.
Examples of this trend can be seen in the growing focus on blue finance, supporting ocean health and sustainability, and in innovative risk-sharing structures like the Maldives' blended finance facility for coral reef insurance, supported by a major European bank.
Whether the momentum from 2024 carries through a turbulent 2025 is yet to be seen. However, future growth in whale deals will likely depend on the continued innovation in financial structuring, stronger policy incentives, and clearer demonstration of both financial and environmental returns.
Science plays a crucial role in shaping the environmental-science sector, as it provides critical data and insights for assessing the impact of climate-change initiatives. This has led to an increase in interest from institutional investors, who are investing in science-based climate solutions, such as the World's largest private market investment vehicle, CTF, which focuses on climate solutions in emerging markets. Finance instruments like impact investment and sustainability-linked finance are becoming popular, as they offer both financial returns and measurable environmental outcomes, thereby appealing to institutional investors.
