Major Dutch pension funds are among the backers of a new fund financing small- and medium-sized businesses (SMEs) in developing countries jointly launched by SNS Impact Investing and the €6.3bn Dutch development bank FMO, which has made a first close at €100m in investments.
Backers of the SNS FMO SME Finance Fund include the €12.6bn Spoorweg Pensioenfonds (railways pension fund) and the €2.9bn Pensioenfonds Openbaar Vervoer (public transport fund), and Zwitserleven, the former life and pensions business of Swiss Life, which is now owned by SNS REAAL, the Dutch financial group, which was taken into government hands at the beginning of this year. The fund, which will be overseen by both SNS and FMO, will invest in local financial institutions in developing markets, which will then loan capital to SMEs.
The Dutch investors said potential recipients of the loans would be entrepreneurs active in sectors such as agribusiness, food and distribution, retail business, production and transportation.Yvonne Bakkum, Director of FMO Investment Management, the fund manager of FMO, said: “Local banks are best equipped to judge which socially relevant local companies can use finance. This approach also has efficiency benefits, as intensive support and control from the bank are required while financing small and medium enterprises with relatively small loans”. The management fees for the fund are understood to have been kept low and return expectations are being marketed in the range of Euribor + 3-6 percent.
Willem Horstmann, CFO of Zwitserleven, said: “At Zwitserleven we are conscious of the expectations for the future of our customers – mostly companies that want to arrange the pensions of their employees in a responsible way. As a pension insurance company we want to make sure that returns on our investments are good and at the same time are adding social value. By also investing in developing markets we realize this responsibility.”