Responsible funds: Nov 28. Impax grows assets by 25% in the last year

RI’s round up of the major sustainable funds news.

Impax Asset Management, the London-based environmental investment specialist, has grown its assets under management by 25% to £2.8bn (€3.5bn) for the period ending 30 September 2014. Ian Simm, chief executive, said the board was proposing an increased final dividend of 1.1p (€1.4p) per share, which if approved, would raise the dividend payout over the year by 56% compared to 2013.

The Bridges Social Impact Bond Fund and the Bridges Social Entrepreneurs Fund, managed by sustainable and impact investment fund manager Bridges Ventures, have invested an initial £1m in a new UK social impact bond pioneering a foster placement scheme in Birmingham. The scheme, which will aim to find stable family foster placements for around 60 young people in residential care over a four-year period, will be delivered by social enterprise Core Assets Group. Birmingham City Council will pay outcome payments if targets are successfully met. A spokeswoman said expected returns would not be disclosed. Andrew Levitt, who heads up both Bridges funds, said there was potential for following-on investment if it is a success.

UK social investor Big Society Capital has made a £12m (€15m) seed investment into the Cheyne Social Property Impact run by London-based £4bn (€5m) hedge fund Cheyne Capital. Its new impact fund will buy property and then rent it to organisations that deliver services like affordable housing, aid for the elderly and care through the National Health Service. It aims to raise around £300m (€378m) with target returns of 10 to 12 per cent with leverage, reports the New York Times’ Dealbook. Jonathan Lourie, chief executive of Cheyne Capital, said: “We believe the reduction in government grants and the altered market structure provide an opportunity for alternative investment managers such as Cheyne to enter the sector and to be providers of responsible private capital. Our investors share our conviction that financial and social returns are complementary and will lead to superior outcomes over the long term.”

Chinese State-owned power generator Huaneng has set up the country’s first carbon fund, which will focus on trading carbon permits in the emissions trading scheme in Hubei province, reports Reuters.
The establishment of the 30 million yuan ($4.9 million) fund marks another step towards maturity for China’s fledgling pilot carbon markets, which will convert to a national scheme in 2016.

Growth in the world’s 30 key microfinance markets should be just above 20% in 2015 according to a new study by responsAbility, the Swiss microfinance fund manager. In the study, responsAbility put the current volume for the 30 markets at $5.7bn (€4.6bn). By the end of next year, it expects that figure to rise to just under $7bn and even double by 2019 to $14bn. According to responsAbility, a major reason for the expected growth is the better understanding of the microfinance model by the governments in emerging markets. “As a result, we see improvements in the regulation of microfinance in these markets,” the Swiss firm said. Started in 2003, Zurich-based responsAbility runs $2.2bn in assets for investors, most of which are in microfinance funds.
Link to responsAbility study*Amundi Asset Management has launched an exchange-traded fund* (ETF) that tracks an index consisting of 400 Japanese companies considered to be well governed. The index is known as the JPX-Nikkei 400, and Amundi said that along with the governance criterion, the index’s members were selected on the basis of their profitability in the last three years and whether they had a sizeable market capitalisation. Amundi also said the JPX-Nikkei 400 had become a benchmark for investors in Japan, with the Bank of Japan and the €948bn Government Pension Investment Fund now employing it. The ETF is offered in share classes denominated in Japanese Yen and Euro. Its total expense ratio (TER) is 0.18%, which Amundi says is the lowest in the market for such exposure.

The foundation for Concordia University in Montreal has created a sustainable investment fund that has been endowed with $C5m (€3.5m) in assets and could get more. According to the Concordia University Foundation (CUF), the fund will select investment managers that select companies with high scores on ESG (environmental, social and governance) issues. Accompanying this best-in-class approach is exclusion of sectors like tobacco, weapons and tobacco. CUF’s fund will also seek out investments aimed at fighting climate change and those that promote access to food and water.

The Frankfurter Rundschau, a left-wing newspaper published in Frankfurt, has decided to list quotes from the sustainable Global Challenges Index (GCX) instead of those from the MDax, the country’s main index for mid-cap stocks. “The Frankfurter Rundschau has been a promoter of sustainable development for years. By placing the GCX prominently on our financial pages, we want to make it easier for our readers to invest in such an index,” said Daniel Baumann, Chief Economics Editor for the Rundschau. Coverage of the index’s 50 members will also be beefed up, Baumann added. The GCX was launched in 2007 by German ESG firm Oekom Research and the Hanover Bourse. Since its inception, the index has attracted €250m in assets from private and institutional investors.

The Bayerische Versorgungskammer (BVK), Germany’s largest pension fund with €59bn in assets, has acquired €60m of a €125m loan that DekaBank provided to a Swiss renewable energy firm for the acquisition of 18 wind parks. “We would like to expand our infrastructure debt investments in future years to make the asset class a significant component of our fixed income portfolio,” Constantin Echter, Head of Fixed Income at the BVK, said in a statement. Further details were not disclosed. The BVK’s fixed income portfolio accounts for around 63% of total assets. The parks, built between 2002 and 2009, are located in the German state of Brandenburg and have a combined capacity of 150MW – or enough to supply 56,000 households with power.

The European Commission’s European Fund for Strategic Investments (EFSF) which aims to mobilise €315bn of infrastructure capital in the three years to 2017 has earmarked part of the capital for renewables and energy efficiency projects. The broad proposals for the fund include €5bn of capital from the European Investment Bank and €16bn in EU guarantees, with the EU hoping to attract €240bn in third party financing for long-term investment projects and a further €75bn in funding for small and medium-sized enterprises (SMEs).