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Blended Finance Capital Stack

An illustrative model of LP/GP capital structuring, protection, waterfall, and tranche returns, for educational discussion. Generic inputs only; not investment, legal, or financial advice.

Fund Architecture

Investment strategy Instrument mix

Common BF structures Quick presets

Target fund size

Senior LP share

Mezzanine LP share optional

Junior LP share

Default structure is senior/junior. If mezzanine is set above 0%, junior is calculated automatically so senior, mezzanine, and junior always add to 100% of LP capital.

GP commitment

External grant / TA facility

TA is outside the fund. It does not receive distributions and is not automatically a first-loss tranche; here it modestly de-risks the portfolio assumptions.

Return And Terms

Fund term

Investment period

Expected gross portfolio IRR

Downside gross IRR

Senior preferred return

Mezzanine preferred return

Junior preferred return

GP carry on residual profits

Annual management fee

Waterfall approach Economics

First-loss only repays senior first, then junior/mezz capital, then gives all LPs the same preferred return. Return enhancement lets senior, mezzanine, and junior have different preferred return thresholds.

ILPA Alignment

Carry reserve / escrow

ILPA favours structures that minimise clawback risk. For non-whole-fund waterfalls, meaningful carry reserves are expected.

Subscription line limit

Subscription line duration

Bridge facilities should be limited, disclosed, and not mainly used to inflate reported IRR or accelerate carry.

Portfolio company fee offset Disclosure

LP reporting package Transparency

Impact Context

Target sector Impact case

Target geography Additionality

Credit Enhancement

Senior guarantee coverage

This is the maximum amount a guarantor covers as a percentage of senior LP capital if the senior tranche is short after the waterfall.

Stress portfolio impairment

This is a one-time loss to terminal portfolio value in the stress case. A 28% impairment means the portfolio exits at 72% of expected principal value before the waterfall.

Senior LP net IRR

First-loss cushion

Senior break-even gross IRR

After fees, junior/mezz subordination, TA risk effect, and guarantee proceeds.

Residual profit after carry

Capital Stack

Risk Protection

Subordination

Guarantee

TA facility

Fee drag

Guarantee is payable only if senior LPs are short after fund distributions. Stress impairment reduces portfolio exit value before fees and waterfall allocations.

Distribution Waterfall

Structure Readout

Optimise stack searches senior, mezzanine, junior, and guarantee levels to protect senior LPs in downside/stress cases while preserving junior/mezz upside and using the least concessional support.

Impact Narrative

Mobilisation Narrative

ILPA Alignment Review

Based on ILPA Principles 3.0 themes: alignment of interest, whole-fund economics, transparent fee and expense treatment, LPAC governance, reporting, and responsible use of subscription lines.

Scenario Returns By Tranche

Tranche	Capital	Distribution	MOIC	Net IRR	Protection

Illustrative model for educational purposes only. It uses simplified, generic assumptions, does not model any specific fund or transaction, and does not constitute investment, legal, tax, or financial advice, nor an offer, recommendation, or financial promotion. SCC Partners (Strategic Climate Capital Ltd) is not authorised by the Financial Conduct Authority. Real structures require detailed independent analysis.