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Responsible Funds, Feb. 6: Star manager Woodford launches patient capital fund

The round-up of responsible funds news

Star fund manager Neil Woodford is launching a ‘patient capital’ fund. His Woodford Investment Management plans to raise £200m (€269m) for the new Woodford Patient Capital Trust plc. The London Stock Exchange-listed “unconstrained” trust will back a diversified portfolio of mostly UK listed and unlisted companies. The firm said “the lack of long-term patient equity capital has created a compelling opportunity to invest in businesses with outstanding intellectual property”. The fund’s portfolio manager won’t receive a management fee; it will only be awarded a fee based on performance. “Very few investors are willing to embrace the long-term ‘patient capital’ approach required in this area to deliver successful outcomes,” Woodford said.

KGAL, the Germany-based renewable funds provider, has reported that investor inflows to its infrastructure funds, including those that invest in wind and solar energy, fell dramatically last year, as subsidy cutbacks on renewables in southern Europe choked demand. Inflows totalled €58.5m in 2014, or 20% of the volume in 2013 (€287.9m). “It’s clear that the cuts in subsidies, whether for the future or retroactively, worsened the climate for investment,” KGAL said, though it hoped investor demand would return.

Dutch pension asset manager PGGM has reportedly allocated between €50-€100m to the Black River Food Fund 2, which is run by an arm of US agribusiness and trading giant Cargill. According to media reports, PGGM was the largest investor in Black River Capital Partners Food Fund, Black River’s first fund and which closed at over $450m four years ago.

Dutch printing sector pension fund PGB is reportedly investing €20m in Actiam Institutional Microfinance Fund III, the vehicle run by Actiam Impact Investing (the former SNS Asset Management) providing debt funding to microfinance institutions. Industry site Microcapital reported the Actiam fund has total commitments of €130m and a 6% target return. Other investors reportedly also include Spoorwegpensioenfonds (SPF), the Dutch pension fund for railway workers, and Stichting Pensioenfonds Openbaar Vervoer (SPOV), the Dutch pension fund for public transport.

The European Commission will “encourage” the European Investment Bank (EIB) to make use of the EU’s new “ELTIF” long-term investment fund vehicle. “We’ll be encouraging the take-up by EU institutions like the EIB to make use of ELTIFs,” said Jonathan Hill, the European Commissioner for Financial Stability, Financial Services and Capital Markets Union. Hill was speaking at an event on long-term financing organized by Finance Watch in Brussels this week. The group is an independent not-for-profit body set up in 2011.

The FP WHEB Sustainability Fund has undergone an analysis by the Center for Social and Sustainable Products (CSSP). It found that 91 tonnes of CO2 equivalents was produced per £1m invested in the fund. This compares to 282m tonnes of CO2e per £1m invested in the benchmark, the MSCI World, WHEB said. “An investment in the WHEB fund therefore has a carbon footprint that is 70% less than an equivalent investment in the benchmark,” said Seb Beloe, partner in WHEB’s listed equity team.Wespath Investment Management, the investments division of the General Board of Pension and Health Benefits of the United Methodist Church, has launched a new passively US equity index fund benchmarked to the Russell 3000 Index. The U.S. Equity Index Fund was created by converting an existing $500m separately managed segment of its $7.2bn US Equity Fund to a daily valued fund, and offering it as a stand-alone investment vehicle. The new fund will continue to be sub-advised by BlackRock, which has run the all-cap mandate since 1999. The new fund will leverage the capabilities of Wespath’s Sustainable Investment Strategies team members”.

US confectioner Mars and French dairy products producer Danone plan to invest £79m (€120m) over the next decade in an impact investment fund targeted at improving the productivity of smallholder farmers in Africa, Latin America and Asia. The Livelihoods Fund for Family Farming (Livelihoods 3F) will prioritize key crops in firms’ product lines dominated by smallholder production such as vanilla, cocoa and sugar. Livelihoods 3F will capitalize on the success of the first Livelihoods fund, a carbon investment fund initiated by Danone in 2011 and joined by nine companies since. Announcement

The UK government’s Department for Business (BIS) has sold its entire 10.8% stake in Greencoat UK Wind, the listed wind investment vehicle where it was a cornerstone investor in the firm’s 2013 listing. The shares were placed “with a broad range of investors” by RBC Capital Markets, Barclays and Winterflood Securities, Greencoat said. Company chairman Tim Ingram said: “BIS’s support has proven to be very successful, with over £1.7bn of private capital being raised by Greencoat UK Wind and other follow-on funds.”

The UK has launched the first social impact bonds to utilize social investment tax relief (SITR), which lets retail investors claim back against tax 30% of unsecured investment into regulated social sector organisations and social impact bonds. The social impact bonds are worth around £900,000 and will tackle youth homelessness. The SIBs are two of seven agreed through the Fair Chance Fund, which is backed by the Department for Communities and Local Government and the Cabinet Office. It will offer a 19.3% return over three years. A combination of individual investors, charities and institutional investors have backed the SIB with different layers of risk.

SITAWI, the Brazilian nonprofit organization, is launching its first thematic social fund. The Social Fund FEM-Innovation – Women for ICT with social impact offering will contribute to equalize the participation of women in tech development, currently dominated 85% by men. “The training and the entry of women in this area aims to incorporate more inclusive values and behaviors into the development of new technologies,” SITAWI said.

Dubai’s DP World, on of the world’s biggest port operators has topped the S&P/Hawkamah Pan Arab ESG Index for the second year. The index ranks the transparency and disclosure of listed companies in the Arab world based on ESG metrics. The participants are derived from the top 150 pan-Arab companies, listed on stock markets of Bahrain, Egypt, Jordan, Lebanon, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the UAE. Link