Sweden’s AP7 targets €100m clean tech investments

Fund weighs up options for potential returns from renewables.

Sweden’s AP7 fund, the €9.3bn ($13.1bn) default option for the state organised PPM pensions system, is to invest up to €100m in clean technology funds. It joins a growing number of pension funds making commitments to renewable energy.
The fund told Responsible Investor it was aiming to place an initial one per cent of its total portfolio in clean tech by the end of the year. It is currently examining a range of investment possibilities including index related products and private equity funds.
Christian Ragnartz, chief investment analyst at AP7, said: “We have looked at the evidence and believe that from a return perspective the potential is there for good investments.”
Ragnartz said talk of a clean technology investment bubble discounted the fact that many companies in the clean tech sector were profitable and showing good future income streams.
AP7 manages the assets of millions of Swedes who choose not to assign a portion of income tax into specific mutual funds under the PPM system.
The fund joins a number of Europe’s most sophisticated pension funds in investing in the asset class.
The recent €500m joint injection by ABP/PGGM to a clean tech private equity fund of funds via theirjointly owned venture house, Alpinvest, was a watershed because PGGM said it was part of its fiduciary duty to look at renewable energy and clean technology. Another pioneer, the Universities Superannuation Scheme (USS), started making allocations to clean tech as early as 2000 when it invested in two funds with Merrill Lynch and Impax. The fund now has about $200m either invested or committed to the renewables sector. Investment in clean tech has boomed in the last year.
In the listed sector, a record 15.2% – €4.6bn from just over €30bn – of the total sales of global pooled equity funds in the first seven months of this year poured into ecological and environmental funds, according to data provider Lipper Feri. The funds are defined as those investing at least 80% of their assets in companies in environmental technology, renewable and alternative energy and resources. The same sector won only 2.6% of the total collect for 2006 and just 0.6% in 2005.
In the unlisted sector, investment in climate change and clean energy private equity funds is also breaking records. From January to September this year, $5.7bn (€4.2bn) was invested in the sector, according to Venture Business Research.
The figure was already 50% higher than the total for 2006 when $3.8bn was invested.