Fund Solutions

This Week’s Fund News: GSAM Raises US$1.6 Billion For Climate Fund

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including GSAM, M&G, AXA IM, Gresham House, Hong Leung AM, HESTA and EAIF.  

Goldman Sachs Asset Management (GSAM) has raised US$1.6 billion in private capital for a climate fund, the GSAM Horizon Environment and Climate Solutions I fund. This marks the close of the firm’s first private equity fund – which is Article 9 SFDR compliant – focused on investing in companies providing climate and environmental solutions. Launching in 2021, the fund provides growth capital to firms in the advanced stages of developing solutions in clean energy, sustainable transport, as well as agriculture and ecosystem services. The fund has so far made US$1 billion in investments comprised of 12 separate investments of between US$80 million and US$90 million, including in Swedish battery developer Northvolt and Spain-based materials science company Recover Textile Systems. The firm has set a ten-year goal of US$750 billion in sustainable finance activity by 2030, of which Goldman Sachs has achieved approximately US$300 billion to date. Ken Pontarelli, Head of Sustainable Investing for Private Markets at GSAM, told Reuters: “The centre of the bullseye that we look for… is if we can invest in companies that have products and services that enable other organisations to cost-effectively meet their sustainability objectives, that’s a winner.” 

International savings and investment manager M&G has raised €578 million for new continental European residential property strategy. The firm has expanded its international real estate fund range with the launch of the M&G European Living Property Fund, building on its €1.5 billion UK residential property investment strategy. The fund invests in student, private rented and retirement housing sectors, looking to offer institutional investors index-linked rental income, house price exposure and geographical diversification. The fund launches with €578 million of capital from two investors and a €75 million acquisition of 124 recently refurbished apartments in a landmark Art Nouveau building in Helsinki – the first building in Finland to receive the highest green building certification. MN – an asset manager of Dutch pension funds – has committed €400 million to the fund as part of its strategy to diversify and internationalise its residential exposure. Jack Daniels, Chief Investment Officer at M&G, said: “Expanding the reach of our residential capabilities into continental Europe is a natural progression, building on the experience and expertise we have developed over the past decade in the UK, and complementing our growing European real estate investment platform.” 

AXA Investment Managers (AXA IM) has launched an equity fund dedicated to plastic and waste transition. The fund looks to support the aim of UN SDG Goal 12, with the fund investing in companies that are UN SDG 12 aligned. This includes aligning through the actions they are taking in their operations, such as production processes, recycling rates, and supply chain management to limit or manage in a sustainable way their plastic and waste footprint. The fund – which is managed by the AXA IM Equity Quality improvement team – invests in large, mid-, and small-cap companies across developed and emerging markets, with the selection and weightings of the stocks based on a quantitative process that incorporates both financial and non-financial data. This process has the objective of identifying fundamental drivers of risk and return whilst structuring the portfolio in a way that meets the fund’s SDG objectives. Jonathan White, AXA IM Equity QI team’s Head of Investment Strategy & Sustainability, said: “Companies that are reducing waste and supporting a more sustainable approach to their use of plastic play a key role in the effort to mitigate climate change and stem biodiversity loss. We expect the next few years to be pivotal in plastics pollution mitigation driven by both government regulation and changing end-consumer preference.” 

UK-based capital market company Gresham House has launched an Irish forestry fund, which looks to drive afforestation in the country. The Irish Strategic Forestry Fund, launched alongside Coillte and Ireland Strategic Investment Fund (ISIF), will provide as much as €200 million in capital from Irish and international investors to create new forests and acquire existing forests across Ireland. The fund will acquire existing forest assets and when fully deployed, will represent a portfolio of approximately 12,000 hectares of new and existing forests. ISIF has committed an initial €25 million, contributing to the €35 million which the fund has raised so far. This capital will complement other Irish and international capital to promote sustainable investments in a sector that is key to addressing the climate crisis. Olly Hughes, Managing Director at Gresham House Forestry, said: “This initiative will create a platform for enhancing Ireland’s forestry sector, delivering real change and momentum and making a meaningful contribution to Ireland’s crucial afforestation ambitions. The combination of skills the fund brings together will be key to unlocking and developing new forests in Ireland, helping to support the ambitions of the Irish Climate Action Plan.” 

Malaysia-based Hong Leong Asset Management (AM) has launched its first Shariah-compliant ESG fund, the Hong Leong Global Shariah ESG Fund. The fund looks to offer medium-to-long-term capital growth to investors through investment in a globally diversified Shariah-compliant portfolio of securities focusing on ESG criteria in its investment process. “It is encouraging to observe that today’s investors seek more than just financial returns; they have a clear vision and want investment vehicles that do not compromise the environment and faith-based values,” Noor Aini Shaik Awab, CEO Hong Leong Islamic AM, said. “With the launch of the HL Global Shariah ESG Fund, we are delighted for the investors as they are now presented with a new, ethical and meaningful investment opportunity.” The HL Global Shariah ESG Fund is the second ESG fund launched by Hong Leong AM in the last nine months. 

Australian super fund HESTA has committed an additional US$200 million to the HESTA Sustainable Capital Investment Trust (HSCIT). This commitment further expands the sustainable private equity partnership between HESTA and US$7.5 billion AUM independent private markets investment and advisory firm Stafford Capital Partners, as well as bringing the total committed to the trust to US$450 million. The HSCIT makes direct investments in lower-mid-market private equity businesses around the world which make material contributions to one or more of the UN’s Good Health & Well-Being, Gender Equality, Affordable and Clean Energy, Climate Action, Clean Water and Sanitation, and Decent Work and Economic Growth SDGs. Sonya Sawtell-Rickson, CIO at HESTA, said: “Through private equity investments like this we’re supporting innovative, cutting-edge companies grow and develop their businesses to deliver sustainability solutions at greater scale to the market. This is helping us to provide strong, long-term returns for HESTA members while also having a positive impact on progressing global sustainable development goals.” 

The Emerging Africa Infrastructure Fund (EAIF) has committed €25 million to aid the construction of a 44-megawatt (MW) hydroelectric plant in Côte d’Ivoire. The investment from the Private Infrastructure Development Group (PIDG) company will form part of a €174 million project, which is Côte d’Ivoire’s first hydro-electric development by an independent power producer. When operational, the plant is projected to provide up to 217 gigawatt hours (GWh) of capacity per annum. In the country electrification rates range from 88% in urban areas to 31% in rural parts of the country, with the plant having the potential to reduce CO2 emissions by 124,000 tons per annum. The construction of the plant, as well as 3km of access roads and a 4km 90 kV transmission line, will create more than 500 jobs in the region. Paromita Chatterjee, Investment Director at the EAIF’s fund manager Ninety One, said: “We are excited that it delivers on three of PIDG’s strategic objectives: mobilising private capital, enabling economic development and contributing to increasing Africa’s stock of renewable energy infrastructure.” 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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