Friday Funds: NBIM and Iberdrola partner on €1.2bn Spanish renewables project

The latest developments in ESG-related funds: PensionBee and BlackRock launch impact pension; ERAFP awards €300m mandate to Scientific Beta.

Iberdrola and Norges Bank Investment Management (NBIM) have formed an alliance to invest in 1,265MW of renewables in Spain. NBIM will pay €600 million for a 49 percent share of the solar and onshore wind power portfolio. The valuation of the assets amounts to around €1.2 billion, and Iberdrola will hold a majority stake. The total capacity will be broken down as 20 percent from wind and 80 percent from solar PV, with seven solar power plants and five onshore wind power plants. The renewable energy portfolio will have the capacity to meet the electricity needs of more than 700,000 homes each year. Nine of the projects are under development and expected to be completed between 2023-25. The agreement allows for the partnership to be extended to other countries.

UK pension provider PensionBee is launching a positive impact pension in partnership with BlackRock. The plan will exclusively invest in companies tackling environmental and social issues across the world, allowing savers to direct their pension money towards companies providing solutions to the SDGs and the transition to net zero. The provider is seeking a collective £50 million ($62 million; €57 million) in seed commitments from existing customers before launching the fund to the wider public. This is PensionBee’s third responsible plan, following the launch of Shariah and Fossil Fuel Free plans in 2019 and 2020 respectively.

French public service pension scheme ERAFP has announced that a €300 million mandate will be benchmarked to the Scientific Beta Eurozone Climate Impact Consistent EU PAB Compliant index. A corresponding fund has also been launched. The choice of index reflects ERAFP’s climate commitments, made within the framework of the Net Zero Asset Owner Alliance. The mandate will be awarded for a four-year period, twice renewable for one year, bringing the maximum term to six years. It must be managed while respecting the socially responsible investing principles under which all ERAFP’s allocations have been managed since 2005.

Octopus Investments has launched a UK affordable housing strategy. The evergreen strategy is targeting initial commitments of £200 million-£300 million across multiple closes in 2023. Last May, the company acquired a registered provider of social housing, which will ensure the strategy is subject to appropriate regulatory oversight and enables the company to draw on grant funding to support the delivery of new homes. The strategy will also aim to build energy-efficient houses. Co-investment opportunities will be available for local investors such as Local Government Pension Schemes. The strategy will be led by Jack Burnham, head of affordable housing at Octopus.

Stewart Investors has launched an Indian subcontinent sustainability fund for global investors. The fund is available as an Irish-domiciled VCC for investors in the UK, European Economic Area, Switzerland and Asia. The fund will invest in companies based in or which conduct the majority of their activity in the Indian subcontinent region and which are positioned to contribute to and benefit from sustainable development. It will be managed by Sashi Reddy and David Gait.

Brazilian insurance company Newe has received funding of 27 million reais ($5.2 million; €4.8 million) from the BlueOrchard-managed InsuResilience investment strategy. The strategy, which aims to strengthen the resilience of developing countries to the effects of climate change, was set up on behalf of the German government by development bank KfW. Newe is developing fully digitised weather and yield parametric products targeting small-scale farmers and people with low incomes living in rural areas – a group that is largely underserved by traditional insurance players. The company is expected to reach more than 1.9 million beneficiaries by 2027.

A social impact investment fund developed by Big Issue Invest, UnLtd and Shift has added a new investor group, just as the fund completed its first close of £8.2 million towards its £25 million target size. The additional investors include: Big Society Capital, Greater Manchester Combined Authority, the University of Edinburgh, Scope, Trust for London, Joseph Rowntree Foundation, Charities Trust, Barrow Cadbury Trust and philanthropist Nick Marple. The backers will join existing major partners Bank of America and Access, which came onboard last year.

Alongside the announcement, the companies have renewed their call for applications from UK-based entrepreneurs. The fund offers flexible and patient capital for social businesses to grow their impact, ringfencing a minimum of 50 percent of funding for leaders from underrepresented backgrounds. More than 75 percent of the board and 50 percent of the management team of each social business should identify as at least one of the inclusion groups: women, disabled people, black, Asian, minoritised ethnic, Gypsy, Roma, Traveller or LGBTQIA+. Alternatively, they can have direct lived experience of the social issues the social business is focused on or have experienced socio-economic disadvantage.

Invesco has launched a global high yield ESG ETF, expanding its corporate bond ESG range. The Global High Yield Corporate Bond ESG UCITS ETF aims to track the Bloomberg MSCI Global High Yield Liquid Corporate ESG Weighted SRI Bond Index, which incorporates both exclusionary filters and tilting to overweight issuers with a strong ESG profile. Securities are excluded from the index if they have an MSCI ESG rating below BB, have faced severe controversies on ESG issues over the past three years, or are involved in alcohol, adult entertainment, genetically modified organisms, nuclear power, oil sands, thermal coal, tobacco, unconventional oil and gas, or weapons.

NextEnergy Capital (NEC) has launched its follow-on private OECD international solar strategy. NPV ESG is NEC’s fifth investment vehicle focused on the solar sector. The Article 9 fund will primarily invest in OECD solar assets and adjacent technologies, such as energy storage. It will produce enough clean energy to power around 750,000 households per year, as well as avoid an estimated fossil fuel consumption of up to 145.4 million m3 of natural gas each year.