Global pension funds, including OMERS and the Wiltshire local government pension scheme (LGPS) fund, have committed to a $400m Emerging Markets Transition Debt (EMTD) fund managed by Ninety One.
The debt portfolio will focus on providing companies in emerging markets with commercial financing for energy transition projects including clean infrastructure and technology as well as decarbonisation.
Ninety One stated that the initial $400m raised for the EMTD fund was from a range of institutional investors, including CAD $434bn CDPQ, Canada’s largest pension fund managers, $128.6bn Canadian defined benefit pension plan OMERS and £3.1bn UK Local Government Pension Scheme fund Wiltshire.
Jennifer Devine, head of Wiltshire Pension Fund, said that investing in emerging markets is “vital” for meeting the fund’s target of reaching net zero by 2050.
“Although this can be more challenging in terms of data availability, environmental, social and governance risks etc, in the western world, we have outsourced a lot of our manufacturing to emerging markets, and with that we have effectively outsourced a large amount of our emissions. This is therefore a global issue, and supporting emerging markets to transition is essential in order to get to net zero.
“This strategy is part of our innovative Climate Opportunities (Clops) portfolio, which is a multi-asset portfolio aiming to earn superior risk-adjusted returns by investing in a diversified mix of assets which have the intention to deliver real World change by actively supporting the transition to a low carbon economy,” she told Net Zero Investor.
Wiltshire Pension Fund has allocated £75m to its Clops portfolio, with it announcing this month that Lombard Odier’s Planetary Transition strategy will manage the listed equities allocation of the portfolio, which represents 20% of portfolio assets.
The announcement of the investor interest in the fund comes as South African finance minister Enoch Godongwana praised the membership of the Investor Leadership Network (ILN) and the Bellagio Private Capital Mobilization Consortium toward its goals of increasing investment flows of institutional capital into emerging markets.
Alongside Wiltshire, Marc-André Blanchard, ILN co-chair and executive vice-president and head of CDPQ Global and global head of sustainability, said: “Institutional investors have a leadership role to play in the transition and finance opportunities like the EMTD fund can provide a solution by focusing on private sector investments.
“Aligned with our goal to deploy constructive capital to decarbonize the global economy, this initiative – alongside the U.S. Treasury and ILN – demonstrates CDPQ’s desire to actively participate in the energy transition and to have an enduring impact.”
Hendrik du Toit, ILN Co-Chair and Founder & Chief Executive, Ninety One, added: “So far institutional investors’ investment in emerging markets has been largely focused on public listed equities and sovereign debt. However, much of the investment in the energy transition – particularly in middle income emerging markets- is required in the form of private equity, private debt, project debt and corporate debt.
“We believe that this is a crucial opportunity to have significant real-world impact for both climate and development goals.”
