Danish pension funds establish DKK 5bn sustainable development fund

PKA, PensionDanmark, PFA, ATP, JØP/DIP and PenSam committed DKK 400m each, IFU contributed DKK 1.65bn and private-sector investor Navest contributed DKK 80 m. 

IFU will manage the fund, which has a DKK 5bn target, and aims to raise an additional DKK 1bn in a second and final closing.

The final close is expected by the end of 2018. The fund has a 10-year life, according to Ulrikke Ekelund, head of communications and media at PensionDanmark. She added that the fund is classified as part of the pension scheme's allocation to private equity funds.

The fund will contribute to the realisation of the 17 UN Sustainable Development Goals through investments in sustainable energy, agri-business, infrastructure, water and sanitation, as well as industry, services and the financial sector.

Up to 20% of the fund's investments are expected to be in Europe, although the majority of commitments will be made to companies located in developing countries across Asia and Africa. The fund will invest directly in companies, with a preferred investment size of DKK 25m to DKK 250m. The expected net yield to investors is 10-12%.

Ekelund said the fund is a blended finance vehicle and public-private-partnership with attractive risk mitigation mechanisms.

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