International Investment Plc is assembling a team to develop financial products capable of attracting private capital, as it looks for new ways to channel investor cash into emerging markets as foreign aid dries up.

“A lot of emerging markets are often low-income countries that are either unrated or they’ve got single-B ratings,” said BII Chief Executive Officer Leslie Maasdorp. The aim is “to build wrappers around some of these structures to make it more attractive for commercial investors.”The UK’s development finance institution has appointed BII insider Jo Fry as managing director of the newly formed team. The group plans to hire a syndications professional in either Singapore or Mumbai to work with investors in Asia, and to add a distribution role in the UK, Maasdorp said in an interview.

The team will distribute and syndicate BII’s deals to an array of institutional investors, and will invest in so-called blended finance funds, securitized products and other structured credit transactions. It will also look into channeling money into projects alongside insurers that help communities deal with the effects of climate change.

BII targets clean-energy and other infrastructure projects in Africa, Asia and the Caribbean, generally providing equity or mezzanine financing. It doesn’t place any upper limit on the size of stakes it can hold in companies.

The global development-finance sector is exploring increasingly exotic structures, moving risk off balance sheets by bringing in more private sector capital and relying on complex securitizations. Multilateral development banks agreed this month to actively target synthetic risk transfers, collateralized debt obligations and similar structures to amplify their ability to lend.

BII’s announcement comes after the UK slashed its aid budget to the poorest countries and diverted capital to defense spending. The UK has also halved its planned contributions to the world’s largest climate fund, the United Nations-backed Green Climate Fund, through 2027, following the cancellation of a $4 billion pledge from the US last year.

On Monday, BII announced a plan to invest about $800 million in renewables projects in Southeast Asia over the next five years, with a goal of bringing in a similar amount of capital from other sources. That would be a doubling of its commitments between 2023 and 2025. The money will be deployed via a vehicle called British Climate Partners that was established in April.

Previous models such as project finance, or funding tied to a specific transaction, “are no longer fit for purpose because development finance institutions and multilateral development banks have capital constraints,” Maasdorp said. So now, “the aim is to make repeatable, scalable structures that the capital markets understand better.”BII will also increasingly participate in “multi-originator” platforms, he said. These involve several development financiers, similar to its involvement in the $1 billion Allianz Credit Emerging Markets fund announced in January.