The Swedish government employee pension fund has committed € 26 million to a senior secured lending strategy launched by M & G’s private assets division.
Kåpan Pensioner is investing alongside the Prudential With-Profits Fund, which is making a larger commitment of 175 million euros.
Maria Giertz, chief investment officer of the € 11.2 billion Swedish pension fund, said investing in M&G’s new fund was, in layman’s terms, “a good ESG solution”.
“We have partnered with M&G for several years and are delighted to be a seed investor in their sustainable loan fund due to the close alignment between us in terms of assessing the sustainability of investments,” a- she declared.
M&G was one of the first non-bank investors to enter the European leveraged loan market, in 1999, and manages approximately € 9 billion on behalf of institutional investors through a range of credit funds. .
M&G describes its new senior secured loan fund as having an “explicit goal of sustainability alongside its financial goal”, the pursuit of which will involve exclusion, bilateral and collective engagement, and is geared towards businesses at large. high score and labeled sustainable debt instruments.
There will be improved and explicit reporting and monitoring, the asset manager also said.
“This strategy emphasizes the active elements of investing in private lending as we seek to contribute to the dynamics of sustainability in an asset class that is much less advanced than listed equities or government bonds in setting a pace that encourages faster change, ”said Fiona Hagdrup, manager of the loan fund.
“We will do this by using our network of relationships, including working with trade associations and climate-focused organizations and other ESG organizations, to actively engage in lobbying for greater disclosure of ESG risk factors. and their management and more ambitious commitments to sustainability, environmental and social objectives by companies and sponsors in the short, medium and long term.
Speaking to IPE, Hagdrup said that integrating environmental, social and governance factors has been part of the asset manager’s investment process since 2013, but that developing a proprietary rating methodology is a ” tipping point “in the evolution of the fund.
“This is not trivial; this is fundamental, ”she said, speaking of the expertise and experience that feeds into the methodology, and the confidence that comes from being able to“ quantify what a good looks like ”in terms of durability characteristics.
The allocation of institutional investors to alternative assets such as private debt is increasing, and many investors are also increasing sustainability requirements.
Hagdrup said that Nordic and Dutch institutional investors in particular have long set the bar high for sustainability and that “the vanguard is waiting and demanding evidence not only of taking ESG risks into account, but also a measure of the progress of a company in its course of sustainable development., and this is the bar that we are now crossing ”.