Four Danish pension funds are anchoring a new fund set up by Denmark’s Investment Fund for Developing Countries (IFU) with DKK1.6bn (€214m) of investment, with the loss-guaranteed fund targeting private-sector investment in developing countries.
The fund – Danish SDG Investment Fund II – has a total capital commitment at its first close of DKK2.7bn, according to the government agency IFU, and is aiming to raise DKK5bn in total by its second closing in 2025, by attracting more private investors.
PFA, PKA, P+ and PenSam and IFU said in an announcement yesterday that through private-sector investments in Africa, Asia and Latin America, the fund would contribute to realising the United Nations’ 17 Sustainable Development Goals (SDGs) and provide positive returns to the investors.
Each of the four pension funds is investing DKK400m in the bond, with IFU investing DKK1.066bn alongside them, the parties said.
The establishment of the new fund follows the first Danish SDG Investment Fund, which was launched in 2018 by the Danish foreign affairs minister Lars Løkke Rasmussen.
Torsten Fels, chief executive officer of PenSam, said: “The investment in the first SDG fund has yielded good results and a good return for our members.
“With the first SDG fund, we have demonstrated that a professional investment approach and a responsible development agenda can go hand in hand,” he said.
The fund is a public-private partnership, in which private investors contribute 60% of the total capital commitment, and IFU contributes 40%, the agency said.
IFU said that across the investments, the fund will contribute in particular to SDGs 5, 8, 10 and 13, which cover gender equality, decent jobs, reduced inequality and climate action.
In addition to positive impact, the fund will also deliver an expected annual net return of 12-15%.
It has a built-in preferential return and a EU-provided loss guarantee, to reduce the risk borne by private investors.
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