International law firm Clifford Chance has advised African Development Bank on a new, innovative risk sharing transaction involving the UK Government and three major insurance companies that will scale up African Development Bank Group’s commitments to climate finance by up to $2 billion and in turn support African countries in meeting their Nationally Determined Contributions (NDCs).

The transaction, known as the Room to Run Sovereign, will enable the Bank to reduce the risk capital currently being used by its sovereign operations in order to generate capacity for new climate financing across the African continent. This pioneering collaboration with the insurance market supports the Addis Ababa Action Agenda in achieving its Sustainable Development Goals through leveraging of the private sector

Over the past few years the market has seen the deployment of synthetic securitisation and risk transfer techniques to support a number initiatives in the ESG sector. Clifford Chance has been at the forefront of these developments, having worked on a number of “firsts” in this field, with the Room to Run Sovereign transaction being the latest of these.

The Clifford Chance team working on this transaction was led by London Partner Tim Cleary, with the support of Senior Associates Martin Clarke and Konstantinos Voulgarakis.