Four big Nordic pension funds are investing $700m (€626m) in renewable energy infrastructure in growth economies in Latin America and Asia via a new Danish-run fund targeting $1bn of capital in all.
Three Danish pension funds — PensionDanmark, ATP, and Lægernes Pension — and Norway’s Kommunal Landspensjonskasse (KLP) have committed the capital as cornerstone investors to Copenhagen Infrastructure Partners’ (CIP) New Markets Fund I, according to CIP.
The fund is expected to get further commitments of around $300m in the next few months resulting in a total commitment of approximately $1bn at final close.
Torben Möger Pedersen, chief executive of PensionDenmark, said: “We see the New Markets Fund as a natural next step to broaden the investment universe to new markets in Asia and Latin America where there is a significant need for renewable energy investments that represent attractive investment opportunities for CIP and its investors.”
PensionDanmark said it is investing $250m in the new fund, and an ATP spokesman told IPE Real Assets it is investing the same sum. A KLP spokeswoman also said the pension fund is investing $100m.
CIP said the fund will target greenfield renewable energy infrastructure projects in fast-growing economies mainly in Asia and Latin America as well as some countries in Eastern Europe and Africa.
Jakob Baruël Poulsen, CIP’s managing partner, said the new fund represented a significant step in CIP’s continued expansion, broadening the firm’s offering to include infrastructure funds targeted at these major new economies.
ATP is a new cornerstone investor for CIP, with the other three pension funds already having participated in this way in other funds launched by the Danish firm.
Ulrik Dan Weuder, ATP’s head of global direct investments, said: “This investment fits well with our ambition to create strong returns to our members based on sustainable investments.”
Meanwhile, Harald Koch-Hagen, senior vice president risk and asset allocation at KLP said the fund was “a great opportunity to expand our commitment to catalyse investment in renewable energy infrastructure in fast-growing economies in Asia and Latin America.”
CIP said the new fund would apply the same value creation and de-risking approach as CIP’s existing OECD-focused funds, with planned investment areas including offshore and onshore wind, solar PV, biomass and waste-to-energy and transmission grid systems.
The new fund has a ten-year term and will apply a “build-and-exit” strategy, focusing on greenfield projects, funding construction and then exiting the investments once plants are operational, according to CIP.
CIP said it has expanded its operation by adding a dedicated investment team for the New Markets Fund.
It will be headed by newly-appointed CIP Partner Niels Holst, who was previously managing director of Capricorn Real Assets, CIP said.