AXA IM launches green bonds fund, structures club deal for €200m Schneider Electric issuance

French fund managers, AXA Investment Managers (IM), Mirova and Neuflize OBC Investissements, have partnered on a club deal investing in a €200m green bond issued by Schneider Electric, the French energy management and automation company, as a flurry of green bond activity emanates from France ahead of the COP21 conference in Paris later this month.
The Schneider deal comes as AXA IM has significantly stepped up its green bonds business by launching a green bonds fund – the AXA WF Planet Bonds fund – which invests in both pure green bonds and bond issuers with a high environmental impact, in order, it says, to broaden diversification and liquidity. AXA IM’s Global Rates team will run the fund in collaboration with its Responsible Investment (RI) team.
The Schneider green bond with a 10-year maturity and a coupon of 1.841% was targeted solely at investor signatories to the Green Bond Principles or the Global Investor Statement on Climate Change. The deal was wrapped up last month. AXA IM sourced and structured the bond and invested alongside Mirova and Neuflize, with the bond issuance being jointly managed by French investment banks Crédit Agricole CIB and Natixis.
AXA, the insurer parent of AXA IM plans to triple green investment to over €3bn by 2020. AXA IM, which has been investing in green bonds since 2012, has already invested €1bn in green bonds. Jerome Broustra, Head of Global Rates at AXA IM, said the green bonds market was still relatively small, however, and that the fund launch matched product development with support forthe transition to a low carbon economy. Olivier Vietti, Fixed Income Fund Manager at AXA IM, lead manager on the new fund, said: “This fund aims to offer an attractive yield meaning responsible investors do not have to ‘give up’ yield, relative to the wider fixed income universe when investing to make a positive environmental impact.”
AXA IM’s internal ESG assessment process will determine which green bond issuers have high environmental conviction and are investment prospects. AXA said the fund aims to offer risk/return profile by focusing on yield enhancement and investing in investment grade and high yield issuers.
Matt Christensen, Head of Responsible Investment at AXA IM, said the fund would also enable investors to be aware of the type of green projects financed through their investment, including wind farms, green commercial buildings, public transport solutions and waste water systems.
On the Schneider green bond, John Porter, Global Head of Fixed Income at AXA Investment Managers, said a bespoke platform built for AXA Group by its fixed income and structured finance teams had enabled the club deal. The bond will finance Schneider Electric’s research and development for low-carbon innovation programs in energy efficiency, low resource and greenhouse gas intensity and CO2 reduction products, notably the connection of renewable energy solutions to the power grid. By the end of 2017, Schneider Electric says 100% of its products will be sold with a comprehensive and transparent estimate of their CO2 impacts & gains.