Responsible Funds, May 10: UBS, Folksam, LeapFrog, European Investment Bank, Menhaden

The latest responsible funds news

UBS has announced that its 100% sustainable cross-asset portfolio has quadrupled in size to $5bn of assets. The strategy was launched in 2018 for private clients, with a minimum commitment of $500,000 and was billed as the first of its kind. Link

The Folksam Group says it is increasing the level of sustainability in its SEK80bn (€7.4bn)
foreign shares holdings. It said: “From the end of March until mid-April, the Folksam Group’s life insurance company, Folksam Liv, and companies within KPA Pension, have more than halved the number of shares in the foreign share portfolios. The carbon footprint of the investments is thereby deemed to be reduced by 20%.” It added that the value of the foreign share portfolio amounts to around SEK80bn and the number of shares following the change is approximately 500.

KPMG and the World Economic Forum (WEF) have announced the Sustainable Energy Innovation Fund (SEIF) which will combine public and private capital to fund “disruptive sustainable energy innovations”. SEIF is targeting to raise up to €3bn in funds as it was determined that the fund had to be “of sufficient scale” to have the intended impact. KPG and the WEF are looking for the primary investment manager or specialised sub-managers and invite expressions of interest by May 10.

Scientific Beta, a provider of smart beta indexes, and SACRA, a French pensions scheme for the insurance sector, have launched two low carbon multi-factor indices for the US and Eurozone regions. SACRA’s entire US equity portfolio and part of its Eurozone portfolio will now track the two indices. While the remaining portion of the Eurozone portfolio continues to be actively managed, it is now benchmarked against the new index.

Neutral Fuels, a biodiesel producer, has issued a $50m green bond to fund its expansion into the UAE, Middle East, Asia and Africa to operate “modular-based biodiesel production plants”. The first 2019 series for $12m was issued in April on the Frankfurt exchange. The plants are capable of converting waste cooking oils into European standard EN14214 compliant biofuel.

Heartwood Investment Management – the UK asset management arm of Handelsbanken – has reported that its Sustainable Balanced and Growth strategies have outperformed the conventional variations of those strategies over the past three years: 23.1% vs 20.6% and 30% vs 28% respectively (total return).

Power firm Ørsted has raised £900m through a green bond issue to finance renewable investments including wind farms in the UK. It is a multi-tranche senior unsecured issue with a second party opinion from Cicero. Barclays Bank, Goldman Sachs, Morgan Stanley and NatWest Market acted as joint lead managers on the bond issuances.LeapFrog Investments, a private equity investor in emerging markets, has exceeded a $600m target for its third impact fund which will invest in the healthcare and financial services sectors in Asia and Africa. Around $700m has been raised to-date from investors which include development finance institutions (US’s OPIC and Germany’s DEG), pension funds (Australia’s HESTA and Kempen) and insurers (Prudential Financial and AIG).

The European Investment Bank is considering an investment in the Metier Sustainable Capital Fund II from Bank Metier Private Equity, a South African private equity firm and M&A advisory firm. The fund will invest in eight to 12 projects, mainly in South Africa, with target sectors being grid-tied renewable energy, small scale renewables – mainly solar and resource efficiency.

Millicom International Cellular, a telecoms provider in Latin America and Africa, has priced a SEK2bn (€0.19bn) senior unsecured sustainability bond – the first released under its sustainability bond framework – which will be used to improve energy efficiency and expand its mobile and fixed networks. The bond, which matures in 2024, was significantly oversubscribed and will be listed on the Nasdaq Stockholm sustainable bonds list in the middle of the month.

The Overseas Private Investment Corporation (OPIC), the US government’s development finance institution, has made a $138m commitment to Banco Regional, a Paraguayan bank, to provide Paraguayan SMEs access to credit and finance. Citibank will provide an additional $11.5m of funding. In line with OPIC’s 2X Women’s Initiative, at least one-third of the funds will be allocated to women-owned or women-led SMEs.

S&P Global Ratings expects growth of the global green bond market to grow 8% this year along with an uptick in Latin American issuances after a marked decline in a disappointing 2018. According to the ratings agency, Brazil continues to have the highest share of issuances followed by Chile and Mexico. To date, 2019 has seen increasingly diverse entities pursuing green bond issuances in the region.

Menhaden Plc, the investment firm co-founded by Ben Goldsmith and where ESG figures Emma Howard Boyd and Howard Pearce are directors, says it has added Google’s parent firm Alphabet to its portfolio. “Google is the world’s largest buyer of electricity generated from renewable sources: 2,600 megawatts, which represents 100% of the electricity used by the company.” It sold its positions in transport firm First Group and car giant Volkswagen while adding Brazilian ports group Ocean Wilsons Holding and initiative positions in rail firms Union Pacific and Canadian Pacific Railways. The worst performer over the year, according to its annual accounts, was Australian wind power developer and operator Infigen.