Asset manager Invesco, with $1.63trn of assets, has launched a blended finance climate adaptation fund to support decarbonisation efforts in emerging and developing markets.
The Invesco Climate Adaptation Action Fund (ICAAF) aims to raise $500m of capital from investors and is open for the next nine months, according to the manager.
It will invest in public and private placement bonds in developing countries, targeting climate adaptation sectors including food security, urban infrastructure as well as energy and nature-based solutions, Invesco said.
This comes as pension funds have started to focus more on investment in farmland and food security, with Australian superannuation fund Rest and Los Angeles County Employee Retirement Association making a $600m investment towards sustainable agriculture in March.
In the UK, Local Government Pension Scheme fund, South Yorkshire Pensions Authority, acquired a farmland portfolio in a £260m joint venture with Royal London Asset Management in the same month.
According to Invesco, ICAAF will run over 12 years, comprising of a seven-year investment period followed by a five year run-off period.
The manager will invest 25% of the fund in the public sector and 75% to the private sector, aiming to generate returns of 11.75% and 8.1% per year respectively.
Hamid Asseffar, Invesco’s head of EMEA sustainable and impact investing, distribution, said: “ICAAF is an innovative blended finance fund that can help unlock climate adaptation investment opportunities in developing countries, leveraging the growth of the green social and sustainable labelled debt market with its very targeted use of proceeds.”
