Emerging markets: Proparco and Blue Earth Capital drive impact investing in secondary markets

The first closing of BlueEarth EM Impact Secondaries II, launched by Blue Earth Capital, exceeded $75million. Dedicated to secondary transactions targeting impact assets in emerging countries, this groundbreaking initiative has been supported by Proparco from the outset through a junior “first loss” tranche

Structuring the secondary market in emerging countries

While the secondary market has experienced continuous growth over the past 15 years, reaching record levels in 2024, secondary transactions in emerging markets remain limited and often opportunistic. Yet, the sustained growth in primary fundraising and investment in these economies over the past decade is now paving the way for a more dynamic, structured, and deep secondary market in these regions.

A key lever for accelerating capital mobilization

In emerging markets, the holding of private equity investments remains significantly longer than in developed markets, limiting both return potential and investors’ ability to manage their portfolios dynamically. Secondary transactions address this by providing liquidity to existing investors and giving new investors access to more mature assets with shorter holding periods, thereby reinforcing the liquidity essential for the proper functioning of the private equity market.

By enhancing the overall liquidity cycle, this initiative aims to accelerate capital turnover and, over the long term, facilitate the mobilization of new financial resources.

A catalytic commitment supported by the European Union

With the backing of the European Union through the EFSD+ private sector guarantee program, Proparco has been engaged in this strategy from the outset, notably through the provision of a first-loss tranche.

This tranche absorbs part of the risk and improves the overall risk-return profile, thereby creating the conditions necessary for the participation of private investors in regions where their presence remains limited but crucial.

The mechanism aligns perfectly with Proparco’s mobilization strategy, which seeks to increase and redirect private financing toward sustainable development investments in emerging countries.

Françoise Lombard, CEO of Proparco: “We are proud to support Blue Earth Capital’s innovative mission to build a more efficient market for impact secondaries in emerging economies. As an anchor investor in this inaugural initiative, our objective is to enhance market liquidity, strengthen exit pathways, and ultimately reinforce long-term investor confidence in these regions. Over time, we are convinced that this strategy will help channel sustainable private capital more effectively to where it can generate the greatest impact.”

BlueEarth EM Impact Secondaries II will target high-impact sectors such as climate action, the circular economy, financial inclusion, health, and education.