Friday Funds: ESG ETFs up by 223%

The latest developments in ESG-related funds

Exchange-Traded Funds (ETFs) dedicated to ESG witnessed 223% growth last year, hitting $189bn in AUM, according to TrackInsight. ESG ETFs captured $97bn of flows over the course of 2020, with nearly 200 coming to market. The research also found five of the 10 best performing ETFs globally last year were ESG-related. 

The Australian Government has appointed Sarona Asset Management, MEDA, Volta Capital and the Whitelum Groupto run its A$40m Emerging Markets Impact Investment Fund. The appointments follow an open tender, and the group will be led by Sarona, which specialises in ESG investing in frontier and emerging markets. The fund seeks to address the financing gap for SMEs that improve the lives of the poor, and build the impact investing market in South and South East Asia.

Canada Pension Plan Investment Board’s investment platform, Renewable Power Capital, has made its first investment, committing to buy a 171MW portfolio of Finnish onshore wind projects for €245m. Developer OX2, from whom RPC is buying the three assets, will continue to operate and manage them.  

Foresight Solar Fund has acquired three subsidy-free greenfield solar assets located in Spain, with a combined capacity of 98.5MW. The closed-end fund, whose parent company Foresight Group is preparing to list on the London Stock Exchange, did not disclose the terms of the deal, but said transaction costs would amount to €72m once construction, which is meant to start this summer, is completed. It expects a long-term Power Purchase Agreement to be finalised shortly with a major European energy supplier.

Meanwhile, Foresight Group has raised €430m for its renewables-focused Energy Infrastructure Partners arm, along with co-investment pledges of €170m. Postens Pensionsstiftelse, the investment manager of the Swedish National Post Service, and an unnamed US-based institutional investor, are among the investors. The firm has a fundraising target of €500m, with a hard cap of €750m. 

Investment bank Liberum has introduced a quantitative Climate Portfolio based on its in-house analysis of the impact climate risks have on share prices. Backtests to January 2007 show the portfolio would have outperformed the FTSE All-Share over the last 13 years by 10.3% p.a, according to Liberum. 

Munich-based asset manager Assenagon has merged two fixed income funds to create an ESG-focused fund, according to Citywire Deutschland. In November, the Assenagon Credit ESG (which had €75m in assets under management) was merged with the Assenagon Credit Selection (which managed €252m in assets) – the latter has now been renamed the Assenagon Credit Selection ESG in the course of the merger. “We see ESG as a positive performance factor. That is why it would have been wrong to withhold an increasingly important criterion that is increasingly contributing to performance from investors, ” Michael Hünseler, Head of Credit Portfolio Management at Assenagon, told the paper.

Swiss infrastructure fund manager SUSI Partners has acquired a controlling interest in Italian energy service company Genera Group through its flagship SUSI Energy Transition Fund; this represents SUSI’s first equity investment in the energy efficiency space.

Caisse de dépôt et placement du Québec (CDPQ) and Taiwanese private equity fund Cathay PE are buying a 50% stake in an offshore wind project from Ørsted for around TWD 75bn (€2.15bn). CDPQ will take the larger share of the 605MW Greater Changhua 1 Offshore Wind Farm, expected to be finalised next year. 

Barclays, GV (formerly Google Ventures), and ADM have led Air Protein’s $32m Series A round of fundraising. The firm, which makes meat from elements in the air, will use the funding to launch an innovation R&D lab, accelerate product development and commercialization, and to recruit and build a world-class team.