GLOBAL – Two of Denmark’s largest pension providers have committed launch capital to a DKK1.2bn (€160m) fund investing in renewable energy projects in emerging economies.
The Danish Climate Investment Fund, launched by the country’s investment fund for developing countries (IFU), has attracted commitments from the DKK200bn PKA, DKK150bn PensionDanmark and Pædagogernes Pensionskasse (PBU), the DKK50bn fund for kindergarten and nursery teachers.
The remaining DKK675bn has been supplied by the IFU, the Danish government and Dansk Vækstkapital – a DKK4.8bn venture capital fund launched jointly in 2011 by the government, ATP and LD Pension.
The fund requires a Danish co-investor for all projects, allowing local companies to benefit from the investment.
Torben Möger Pedersen, chief executive at PensionDanmark, hailed the fund as “a brand new type of public-private partnership”, allowing government and pension assets to make the most of Danish companies’ experience in the energy sector.
The commitment follows a similar government-backed project that saw Danish funds provide export credit to foreign companies investing in domestic manufacturing.
Discussing the provider’s DKK200m commitment, Möger Pedersen said: “We are expecting the Danish Climate Investment Fund to deliver solid returns to our members in the coming years, while serving to boost the standing of Danish companies in the new growth markets.”
Healthcare pension provider PKA also committed DKK200m in capital, while PBU invested DKK125m.
PensionDanmark’s Möger Pedersen will sit on the fund’s investment committee alongside PKA managing director Peter Damgaard Jensen.
The climate fund, which the IFU said was expected to grow a further DKK200bn in size after its second close, will invest in technologies aimed at reducing greenhouse emissions in all countries included in the OECD’s Development Assistance Committee.
To that end, projects to be considered include solar, hydro and wind power plants, as well as urban transport construction, biogas plants and projects that can improve energy efficiency, thereby cutting emissions by at least 20%.
“Furthermore, the Danish Climate Investment Fund will invest in projects with the purpose of adjusting to climate change – for example, disaster preparedness, coastal management and climate change information,” the IFU said in a statement.
It added, however, that it would not consider investment in any energy projects that produce carbon, nor in any carbon capture or storage facilities.
The IFU will act as fund manager for the four-year investment lifespan, with projects then divested.
It said it expected annual returns of 12%.
