The iSTOXX APG World Responsible Index applies APG proprietary environmental, social, and governance (ESG) exclusion and non-ESG-leader exclusion screens to the parent iSTOXX World A Index. Read the digital edition of IPE’s latest magazine.The Netherlands’ largest pension fund provider, APG Asset Management, is launching a line of index investments it describes as “baskets of shares in sustainable companies” in which pension funds can choose from different sustainability grades.ĪPG, which manages approximately €613 billion (US$724.4 billion) for 4.7 million pension fund participants, will launch five indexes within the iSTOXX APG World Responsible Investment Indices family in partnership with Deutsche Boerse-owned* index provider Qontigo and asset manager BlackRock. “There are a lot of this kind of initiatives at the moment, and these are capital-intensive sectors,” he said. The fund will focus on individual loans between $10m and $50m in four segments with strong links to one or more SDGs: Energy Access and Clean Energy Sustainable Industry and Infrastructure Inclusive Finance and Food Security.įor every loan, APG will evaluate separately whether it qualifies as a Sustainable Development Investment (SDI) according to the methodology it developed for this together with its Dutch peer PGGM.Īccording to Schepers, renewable energy and infrastructure projects, such as solar and wind parks, are likely to be the priority in the fund’s investment strategy initially. “But what I can say is that costs are lower than what pension funds tend to pay in fees for active management in listed emerging market bonds,” he said. “For the banks, offloading part of their credit risk enables them to increase capacity and originate more new loans,” explained Schepers, who declined to reveal the management fee charged to investors. ILX does not pay an additional mark-up to take on the credit risk of the loans. Since we can draw on the local infrastructure of these banks, it is possible for us to run the fund from Amsterdam.” “These banks act as a kind of risk filter for us as they do the due diligence on the companies and semi-government entities that request loans. The role of development banks as intermediary institutions is supposed to mitigate risk too, Schepers added. “The development bank that granted the loan will always remain the lender of record.” “We will take a minority interest of generally not more than 30% in every loan we invest in, and will receive the corresponding share of cash flows from each of these loans,” explained Manfred Schepers, co-founder and chief executive officer of ILX. The fund will invest in loans originated by international development banks active in emerging markets, such as the International Finance Corporation (the private sector arm of the World Bank), the Asian Development Bank, the African Development Bank and the European Bank for Reconstruction and Development.
At this stage, we therefore are looking for just one or two additional large Dutch pension funds as partners to keep things simple.” Minority interest ILX is currently in talks with several Dutch pension funds to raise an additional $250m for its first fund.ĬEO Manfred Schepers said: “We are also speaking to foreign pension funds who have shown interest in this asset class, but our first priority is to show this strategy works. The idea behind ILX is to mobilise institutional private capital to help fund projects in emerging markets financed by international development banks. ILX is an Amsterdam-based impact investor, which was founded recently with financial assistance of the Dutch, German and British governments to support its incubation phase.
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