Friday Funds: Mirova and CDPQ in largest private raise for green hydrogen

The latest developments in ESG-related funds: Asian sustainable high yield fund; Cardano partners with Big Society Capital

Green hydrogen investment platform Hy2gen has raised €200m from a private investment round with commitments from Mirova, CDPQ and Technip Energies. The investment, the largest private fundraise in green hydrogen to date, will be used to construct production facilities for green hydrogen-based fuels across Europe.

Neuberger Berman has launched a sustainable high yield fund investing in Asia. The fund will invest in high yield bonds from sovereigns and corporates with “strong sustainability profiles”. It aims to have a 30% lower carbon intensity that the broader Asian high yield universe, with the managers engaging with both corporate and sovereign issuers on their ESG profiles and the UN SDGs. Corporates in the bottom 10% of Neuberger’s ESG rankings will be excluded, as will sovereigns with weak ESG profiles.

Astorg has announced the final close of its first dedicated mid-cap fund after hitting the hard cap of €1.3bn, €300m over its initial target. The fund, which Astorg is classifying as Article 8 under the EU SFDR because it integrates “ESG undertakings” into its investment policies, will invest in European-based B2B firms that “benefit from secular and resilient growth as well as attractive and profitable business models”.

Pensions consultancy and investment manager Cardano has announced a partnership with Big Society Capital to invest £195m in affordable housing in the UK. The pair have launched a request for proposals “focused on fund strategies that increase the supply of good quality, affordable housing in the UK alongside generating a market rate financial return”. Big Society Capital will be committing £45m, with Cardano committing £150m. Submissions close on the 11th of March.

BlackRock has launched a range of ESG equity funds domiciled in the UK and aimed towards financial advisers and wealth managers. The funds track ESG benchmarks from Morningstar which contain standard exclusion screens, exclude companies with a severe ESG controversy score and reweight according to ESG characteristics. The funds cover the UK, US, continental Europe, Japan, Pacific ex Japan and emerging markets.

Scope Group has announced a partnership with Fair Cost Index to build a range of ESG equity indexes. The two will construct a series of “core” indexes adopting exclusions and integrating “standard ESG characteristics” and “leaders” indexes retaining the best ESG performers in each sector.

AXA Investment Managers has launched its first social and sustainable bond fund. The AXA WF ACT Social Bonds fund will invest at least 75% of its assets in labelled social and sustainability bonds, with up to 25% invested in non-labelled bonds “aligned with a positive social impact”. AXA plans to classify it as an Article 9 fund under the EU SFDR.

The Pension Insurance Corporation has announced a £100m debt investment in Northern Ireland social housing group Apex Housing Association. The investment, split between a £60m initial funding tranche and a £40m deferred tranche, will go towards the development of around 1,500 new homes and the repayment of existing debt. The funds are secured against a pool of social housing assets, with the new homes built to high environmental standards.

Assets in ESG funds from retail investors on Hargreaves Lansdown’s investment platform have fallen for the first time since March 2020, the firm has said. Net flows into ESG funds were down 115% on January 2021, a significant decline from January 2020, which saw a whopping year-on-year increase of 3082% in inflows. Emma Wall, Head of Investment Analysis & Research at the £138bn retail investment platform, said that this should be viewed as part of a wider picture of market volatility and that January had been a “choppy month” for flows across all sectors.

The MSCI Global Climate Select ETF, which was launched in partnership with the UN at COP26, is likely to fail because promised seed funding is yet to materialise, its manager has said. Speaking to the Financial Times, Ethan Powell, Founder of manager Impact Shares, said the fund, which excludes fossil fuels and overweights low emitters, had amassed less than $2m, and was costing Impact Shares $25,000 a month to manage. Bank of America, Citigroup and Santander had promised seed funding on the condition that their investments did not form more than a certain percentage of fund assets. The fund has failed to attract sufficient additional investments for this seed funding to materialise.

Amundi’s US wing has rebranded its ‘Pioneer’ global equity fund to a sustainable fund and adopted a new investment policy. The fund, which had $300m in AUM at the end of December, will invest no more than 20% of its assets in companies involved in thermal coal, tobacco and controversial weapons. When selecting investments, the team will focus on companies with sustainable business models.