The International Finance Corporation (IFC) has proposed an equity investment of up to $15 million in Catalyst MENA Climate Fund II, a new climate-focused infrastructure vehicle managed by Catalyst Investment Management. The fund aims to scale climate mitigation and adaptation projects across the Middle East and North Africa, with a primary focus on Jordan, Egypt, Tunisia, and Morocco. IFC disclosed the potential transaction in November 2025, with board consideration scheduled for late January 2026 and the investment still pending approval.
Fund Overview and Strategy
Catalyst MENA Climate Fund II will be the second fund managed by Catalyst MENA, following its 2016 Catalyst MENA Clean Energy Fund I, which raised $57 million. The new vehicle is domiciled in Luxembourg and targets a final size between $150 million and $200 million, with a first close of about $70 million to $85 million projected by the end of December 2025. It plans to build a diversified portfolio of greenfield and brownfield assets in renewable power, energy storage, energy efficiency, and water-related infrastructure across the region.
IFC’s Role and Additionality
IFC’s proposed participation of up to $15 million would position the institution as a cornerstone investor in the fund’s initial closing. Its involvement is expected to mobilize additional third-party capital toward the fund’s overall target size and support expansion into markets where demand for greenfield renewable energy projects is increasing. Beyond capital, IFC plans to provide advisory support on gender-lens investing, social inclusion, and sustainability practices, strengthening the fund’s profile in higher-risk markets.
Market Impact and Climate Outcomes
The fund is expected to contribute to greenhouse gas emissions reductions by backing projects that displace more carbon-intensive and expensive sources of power. Investments in energy-efficient technologies, storage solutions, and water-related infrastructure are also anticipated to bolster energy security and climate resilience in the target markets. At a systemic level, Catalyst MENA Climate Fund II is intended to deepen the climate finance ecosystem in MENA by expanding the supply of climate-focused equity capital for infrastructure.
Sponsor Background and Track Record
Founded in 2006, Catalyst MENA positions itself as the first investment manager in the region dedicated exclusively to renewable energy, energy efficiency, and energy and water technology. Its core team brings more than 70 years of combined experience within a wider investment track record that exceeds 100 years across the group. The manager was an early sponsor of solar photovoltaic independent power producer projects, backing a 23 megawatt plant in 2014 and subsequently supporting over 170 megawatts of renewable capacity in Jordan and Egypt while deploying more than $47 million in equity.
Environmental and Social Management
Given its focus on infrastructure assets, the fund has been classified as an FI-1 project under IFC’s environmental and social sustainability policy, reflecting the potential for significant risks and impacts at the sub-project level. These may relate to occupational health and safety, biodiversity, land acquisition and resettlement, stakeholder engagement, and supply chain conditions, particularly in solar projects. Catalyst MENA operates an environmental and social management system that covers project screening, categorization, due diligence, and monitoring, and the fund will appoint a full-time ESG lead and additional environmental and social officer while also enhancing procurement, grievance, and health and safety procedures in line with IFC Performance Standards and World Bank Group guidelines.
The proposed investment in Catalyst MENA Climate Fund II highlights IFC’s continued commitment to scaling renewable energy and climate-resilient infrastructure in the MENA region. If approved, the fund would channel institutional capital toward a pipeline of clean energy, efficiency, and water-related projects in markets where climate and energy transition needs are acute. By pairing long-term capital with strengthened environmental, social, and inclusion standards, the initiative seeks to accelerate the region’s shift toward low-carbon growth while building a more robust climate finance ecosystem.