Danish pension fund doubles African sustainability assets to €80m in a year with new commitment

PensionDanmark makes sustainable agriculture investment.

PensionDanmark, the €15bn Danish labour market pension fund, has doubled its investment to DKK 600m (€80m) in African sustainability-themed investments in less than a year with a new DKK 320m (€43m) allocation to agricultural land in countries including Tanzania, Zambia and Uganda. Earlier this year the fund invested DKK 52m (€7m) in the DI Frontier Market Energy & Carbon Fund, which invests in renewable energy projects in East Africa. In late 2010, it invested DKK 200m (€27m) in publicly listed companies in Central Africa with Duet, the London-based alternatives fund manager. The pension scheme’s latest investment is with the Silverland fund run by UK-based SilverStreet Capital, a private equity sustainable agri specialist. The fund manager’s website says it is applying to be a signatory to the UNPRI. Its Chief Investment Officer, Gary Vaughan-Smith, was formerly Head of Alternative Investments at ABN AMRO Asset Management. The firm has had a good year in attracting institutional investors to the fund, notably Danish pension schemes. It received a DKK 250m (€34m) commitment earlier this year from Danish fund Pensionskassernes Administration (PKA). The US government’s Overseas Private Investment
Corporation (OPIC) has also backed the fund with $150m, part of a broader $500m commitment to five differentinvestment funds operating in the renewable resources sectors across Southeast Asia and Africa. The Silverland fund is targeting annual returns of between 15% and 20%, with a term of up to nine years. It will invest predominantly in Malawi, Mozambique, South Africa, Tanzania, Uganda, and Zambia in farm grain, soya, fruits, vegetables, sugar, tea, and coffee businesses. PensionDanmark, Chief Executive Officer, Torben Möger Pedersen, said: “The combination of a high yield per acre, two harvest seasons a year and land prices, which are significantly lower than in the U.S. and Europe, offers the prospect of an attractive return on investment. We have an increasing focus on investments in Central Africa, which is on track to become one of the next major growth regions of the world. The investments in Africa will be socially responsible and support a sustainable local development. Therefore, the fund will work closely with local farmers about training, seeds and access to markets, so they too will gain from the investment.” Danish institutions have been some of the keenest investors in Africa in the last year. Danish insurer Tryg was also one of the investors in the DI Frontier Market fund, run by Danish asset manager Frontier Investments, with a DKK50m (€6.7m) commitment.