Responsible Funds, May 18: India’s $1bn impact funds, NNIP exits tobacco, launches from Affirmative, DWS and Newton

The latest ESG fund launches and market news, bite-sized.

Social Finance India (SF-Ind) has been created to stimulate impact investment in the country and will launch two $1bn funds by the end of the year. The non-profit, launched by Social Finance Global Network and The Global Steering Group for Impact Investment (GSG), will in October launch the India Education Outcome Fund, targeting outcome-driven education projects, and the India Impact Fund of Funds to focus on long-term affordable debt provision for intermediaries and impact enterprises in renewables and healthcare, among others. “Social impact bonds are an innovative instrument to drive pay for performance in the social sector,” said Ashish Dhawan a Board Member at SF-IND, adding its “primary objective is to eventually get the Indian Government to adopt an outcomes-based approach to funding programmes.” The second fund is being incubated in cooperation with UN SDG Impact Finance and outcomes will be aligned with the SDGs. Social Finance India joins a network Social Finance UK, Social Finance US and Social Finance Israel.
NN Investment Partners will exclude tobacco from all of its fixed-income and equity investment, it has announced. The asset manager already screens out tobacco from its SRI funds, but will extend the approach to all proprietary and client funds and mandates, divesting within one year. The tobacco-related corporate bonds that NN Group holds in its general account assets will be divested immediately or brought to maturity. Valentijn van Nieuwenhuijzen, Chief Investment Officer at NN IP said: “Although we take our stewardship responsibility seriously by helping companies to strengthen their approach to ESG issues, we have concluded that engagement with the tobacco industry will not lead to fundamental changes.”
Affirmative Investment Management has launched a fixed-income impact fund. The US dollar-denominated Liquid Impact Fund will invest in high grade bonds from issuers that “have demonstrated a commitment to aiding the transition to low carbon growth and supporting the UN SDGs”. It will be headed up by AIM Partner, Justin Eeles, and will be required to meet engagement, transparency and reporting criteria. AIM recently announced a strategic Alliance Partnership with Colonial First State, using its platform to the launch the Affirmative Global Bond Fund in Australia.
Newton Investment Management, the London-based subsidiary of BNY Mellon, has unveiled its third sustainable fund this year, aimed at institutional and retail investors. The Sustainable Sterling Bond Fund, which applies an ESG quality review to all holdings, will invest in the fixed interest securities of companies that “demonstrate attractive investment attributes and sustainable business practices”, as well as government and public securities. It will be managed by Howard Cunningham and Scott Freedman. Newton has also launched a Sustainable Real Return Fund and a Sustainable Global Equity Fund so far this year.
DWS, the €700bn recently re-branded Deutsche Asset Management, has launched four new ESG exchange traded funds (ETFs) offering exposure to “ESG-filtered equity indices tracking global, US, Japanese and European markets”. The ESG Xtrackers ETFs track indices that are part of the MSCI ESG Leaders Low Carbon ex Tobacco Involvement 5% series, which claim to use extensive filtering based on MSCI ESG research. DWS claims to have over €20bn in ESG assets under management globally.Swiss private bank Vontobel has liquidated one of its sustainable bond strategies due its small size, Citywire reports. The Vontobel Fund II – Sustainable Euro Bond Concept fund was closed on 11 May with around €5m in assets under management. It had been managed by Daniel Karnaus.
TPG’s $2bn private equity impact investment vehicle has made its first investment in Africa, leading a $47.5m deal to buy an unspecified stake in digital payments provider Cellulant, the FT reports. The US-based asset manager, which recently appointed former US Secretary of State John Kerry as a Senior Advisor, stated that the deal is the largest involving a fintech company that does business only in Africa. Cellulant operates in 11 countries with 94 banks and seven mobile money platforms that have a combined potential customer base of 130m.
The Community Outcomes Fund – a US pay-for-success social impact fund targeting social and health services – has received $40m in investments from The Kresge Foundation, US insurer Prudential Financial and philanthropists Steve and Connie Ballmer. The fund, which is managed by New York-based Maycomb Capital, invests in “social and health services that produce measurable outcomes and deliver financial returns to investors”.
“A federally created and supported social finance fund could help Canada solve some of our country’s most challenging issues”, according to a recent report by a committee of the Upper House of the Canadian parliament. The Senate Committee on Social Affairs, Science and Technology argues that such a fund could “harness the power of private investment and innovative solutions for the public good”, and outlines six recommendations, including a call for the federal government to create a reserve of money to leverage private capital.
Greencoat UK Wind has completed the placement £118.8m of new shares to help fund the acquisition of a further stake Clyde Wind Farms. The transaction will mean the UK yieldco has some 1.13bn ordinary shares outstanding, with outstanding borrowing of £245m under its revolving credit facility and £150m under its long-term borrowing agreement – around 23% of Gross Asset Value. There are now 30 operational wind farms in its portfolio with capacity of 785MW.
The NZ Super Fund has invested $65m in waste and recycling firm Rubicon Global. The $38bn New Zealand pension and sovereign wealth fund said the decision was aligned with its sustainability goals, because Rubicon “connects customers to a network of independent waste haulers and is leading the development of smart city products in the waste and recycling space.
PKA has announced plans to invest in Swedish wind energy for the first time. The Danish pension fund is partnering with Swedish state-owned renewable energy firm, Vattenfall and Danish wind turbine manufacturer, Vestas to provide €350m (£306m) in financing for the 353MW park, expected to be operational by 2021. PKA, which manages €36bn in assets, will take a 30% stake, Vattenfall 30%, and Vestas 40%.
Californian wealth manager Private Ocean – with $1.6bn in assets under management – has announced the addition of ESG investment portfolios to its offerings.