Stockholm (NordSIP) – This week, Dutch asset manager NN Investments announced the first close of a USD 250 million (€205 million) impact fund, in collaboration with Dutch devleopment bank FMO.
Swedish occupational pension fund Alecta, with SEK 800 billion (€80 billion) under management, is one of the seed investors for this new fund. Last September, Alecta announced that it would allocates UDS 100 million to the NN-FMO Emerging Markets Loan fund. The investment strategy is to have an equity portfolio of carefully selected companies and business models, integrating ESG analysis in the investment decisions. At the time, Alecta already had green bonds amounting to SEK 14 billion (€1.4 billion). In addition to Alecta’s contribution, IMAS Foundation which is related to late IKEA founder Ingmar Kamprad’s legacy, also committeed to the fund.
Finding opportunities to make impact investments is not always easy. To better understand Alecta’s committment, NordSIP sought comments from Peter Lööw, Head of Responsible Investing at Alecta. “We do consider this our first real impact investment and would appreciate a larger supply of these types of investments,” he says. “With that said, we are still very selective and exercise the same prudent assessment for all our investments. We will continue to look at these opportunities on a case-by-case basis rather than set a target for capital allocation, and scale and cost-efficiency are important parameters in all our investment decisions.”
Taking careful steps and being patient are key when considering such investments. “It is a challenge when you are not familiar with an asset class or a market,” adds Lööw. “That is why we have built relations with partners with a documented track record and the experience and capacity to make investments that meets our return requirements as well as ESG criteria’s.”
The long time period from initial discussions to the first capital call was somewhat surprising to Lööw. “We have learned to be very patient during the early phase when you make a new type of investment. We actually did the due diligence the first half last year and committed to the first close already in August. Since then, NN Investment Partners and FMO has worked intensively with raising more capital and setting up the fund which has required a lot of paper work. So, this has been very resource intense for us, but we have gained lots of experience along the way. That will definitely help us going forward.”
While there might not be many on the market, Lööw and his team did find some other attractive opportunities, especially on the fixed income side. “We have followed the NN-FMO investment with a USD 200 million investment in the Amundi Planet Emerging Green One Fund. That is a green bond fund focused on emerging markets with a first loss guarantee from the IFC. We also recently invested in IDA’s inaugural bond which is a conventional bond that supports the development in the world’s poorest countries. These are investments that help build local capacity in emerging markets in different ways and thus aim to contribute to a sustainable and economic growth.”
Picture © Alecta