RI ESG Briefing, July 29: Solar Income Fund, Green Climate Fund, GPIF

Environmental

The Rockefeller Brothers Fund has made its first investment directly into a renewables company. It has backed Irish wind and solar firm Mainstream Renewable Power with a $10m equity investment. The commitment was part of a wider equity raise of $117.5m. The IFC, Latin American and Caribbean Fund, Ascension Investment Management and Sanlam are also investors. The financing will be used to support Mainstream’s Lekela Power platform – a joint venture with private equity house Actis – which is aiming to construct more than 1.3GW of clean energy in Africa. Mainstream will contribute $60m of its own money to the investment, in addition to the $117.5m.

Melbourne-based Impact Investment Group (IIG) has launched a A$100m Solar Income Fund with a seed portfolio under construction. The fund has the right of first offer on approximately A$60m of Australian solar infrastructure projects currently under construction. The seed assets include the Karratha Solar Farm located in Western Australia and the Mount Majura and Williamsdale solar farms located in the Australian Capital Territory. The fund will only acquire fully-operational solar farms and will not take any development or construction risk. The fund’s assets will have long-term contracted or regulated off-take agreements with Australian governments and/or investment-grade commercial counterparties.

The Green Climate Fund has issued a request for proposals to help it find financial institutions to oversee its lending programmes to SMEs in the climate space. The UN organisation, which has been seeded with public money from governments worldwide, seeks to leverage private-sector capital in order to channel funding to projects in countries that will be hardest hit by climate change. The deadline for responses to the RFP is August 30.

Zurich-based investor Partners Group is to provide more than $200m to newly-launched Formosa Renewables. It will become the controlling shareholder in the Taiwanese venture. Cathay Life Insurance – a subsidiary of Cathay Financial Holdings – will also take a minority stake, via a vehicle managed by Partners Group. Formosa Renewables has agreed with solar developer Sinogreenergy to build out 550MW of solar capacity across Taiwan over the next three years. Earlier this year, Partners Group invested $100 million in Silicon Ranch Corporate – a US solar firm – and in 2014 it took a stake in Japan Solar.

Barclays, Bank of Tokyo-Mitsubishi UFJ, Natixis, Investec and the UK’s Green Investment Bank have backed the construction of a combined heat and power plant in England to the tune of £300m. The GIB provided £80m of senior debt to the 43MW Kent-based project. Other lenders’ contributions are undisclosed. The site is the first CHP plant to be supported by the UK Government’s Contracts for Difference programme.Eurizon Capital has launched the Eurizon Easyfund Securitized Bond Fund that aims to capitalise the development of the credit market in Europe by fostering investment in the real economy. The sub-fund will invest in the structured credit market, currently being strengthened and promoted by the coordinated action of the European Commission, through the Capital Markets Union and the ECB.

Social

UK-based sustainable and impact investing firm Bridges Ventures has closed its Property Alternatives Fund IV at £168m after three months. Bridges Ventures says it had strong demand from existing investors, particularly local authority pension funds. The fund invests in emerging areas and niche sectors being affected by changing demographics and consumer needs – including healthcare, education, SME business space and affordable residential accommodation. It has a particular focus on adding value through environmental refurbishment and operational improvement.

Dutch development bank FMO has issued its inaugural offshore Zambian Kwacha bond. The $10m bond, which will be listed in Luxembourg, is part of FMO’s strategy to promote local currency lending to SMEs. The cash flows of the bond are denominated in Zambian Kwacha and settled in USD. The transaction was arranged by HSBC. It has a maturity of five years and a yield of 21.5%.

AMP has launched a responsible investment fund. The fund is targeted at offering products under the KiwiSaver Scheme – a New Zealand government policy initiative to encourage voluntary saving for retirement. The fund is one of 16 launched by AMP this week, and considerations ESG issues in its investment strategy.

Governance

The Government Pension Investment Fund (GPIF) in Japan has established two forums, the “Business and Asset Owner’s Forum” and the “Global Asset Owners’ Forum”, which it says aim to optimise the investment chain in line with GPIF’s recently adopted stewardship code and improve long-term investment returns for beneficiaries. Norihiro Takahashi, President of GPIF, said: “I sincerely expect that the establishment of the two forums lead to more advanced activities for our stewardship responsibility for beneficiaries, and that we contribute to sustainable growth and fostering corporate value in investee companies.”