Dutch Development bank FMO expands its funds arm in new deal with country’s largest asset manager

RI talks with FMO Investment Management Director Yvonne Bakkum.

FMO, the €8bn Dutch development bank, has launched a sustainable emerging markets loans fund in partnership with the €186bn manager, NN Investment Partners, the rebranded ING Investment Management, the largest Dutch funds house. The move is part of a continued expansion of FMO’s in-house funds arm, FMO Investment Management, under Director, Yvonne Bakkum. The development bank also hopes to reach a first close of its recently launched FMO Africa Fund later this year. Talking about the new fund launch with NN, Bakkum says: “My mission is to mainstream our products. We go to market now with a sustainable emerging markets loans fund in partnership with NN Investment Partners, who have a strong capability in the area of emerging markets debt and view this as complementary to its broad EMD strategy range, extending the range of illiquid fixed income products they offer to institutional investors.” Bakkum says the fund will make private loans in sectors where FMO has existing competency such as energy, agribusiness and telecoms, and will respect FMO’s ESG integration criteria in credit. She told RI that the FMO Africa Fund, a pan African private equity vehicle, has one medium-sized Dutch pension fund as the anchor with FMO itself putting up a sizeable launch commitment. The fund was originally started with Fairview Capital, the US fund of fund private equity house, as the FMO Fairview Africa Fund, but the relationship has since ended as no critical mass could be achieved with US investors. Bakkum, who has an almost 15-year career with FMO in different positions, latterly as Director of Private Equity and before that manager of credit analysis and business development in Latin America, says the fund-of-funds has a pipeline of sourced private equity funds where the due diligence has been done. FMO Africa will be a mix of fund and directinvestments where FMO takes direct stakes alongside the PE firm, which Bakkum says is a strategy to boost overall returns and get an extra ESG influence. Bakkum took up the lead role at FMO Investment Management upon its creation in 2012 when it was started to act as a facilitator for co-investment with other institutional investors.
FMO IM also runs the ACTIAM FMO SME Finance fund, providing loan financing through local banks for small- and medium-sized businesses (SMEs) in developing countries in sectors such as agribusiness, food and distribution, retail business, production and transportation. The fund, managed in partnership with ACTIAM, the €50bn Dutch responsible asset manager that manages assets for insurers REAAL and Zwitserleven and ASN Bank (among others), had a first close in November 2013 at €100m in investments. Backers of the fund included the €12.6bn Spoorweg Pensioenfonds (railways pension fund) and the €2.9bn Pensioenfonds Openbaar Vervoer (public transport fund).
Bakkum says FMO’s definition of development impact comprises job creation as a key indicator of social impact and lowering of its environmental footprint measured by reduced greenhouse gas emissions. Future areas for product development, she says are renewable energy and possibly agribusiness with a size focus on mid-market and SMEs, where she says companies have less easy access to capital and financing is less crowded, meaning investors can get better margins on their loans.
Few development finance institutions are pulling together such a range of funds to put into the market, and Bakkum says FMO IM’s partnership ambitions are very much international: “We definitely don’t restrict our fundraising to the Netherlands.”