Alecta, Sweden’s largest private pension fund, has invested approximately USD 100 million in a new social bond – Financing For Healthier Lives. The bond is emitted by a non-profit company facilitated by responsAbility, one of the leading asset managers in the field with more than USD 10 Billion invested in emerging markets. Sida, Sweden’s government agency for development cooperation, enables private funding of aid projects by issuing a guarantee.
ResponsAbility, Danske Bank and Sida have partnered to create a Social Bond that will promote healthier lives in emerging markets. The Social Bond will only include investments that support improved access to health and sanitation, the reduction of pollution through renewable energy, sustainably produced food, and access to finance.
It is the first time that Sida guarantees a privately funded social bond. Something that Alecta is proud to be a part of. Alecta is the largest investor in the bond which is also financed by Swedish AFA Insurance.
– The investment has a great mix of experienced investors. It offers a risk adjusted return for our clients while working towards the Sustainable Development Goals. When public and private capital work together, the whole becomes greater than the sum of the parts, says Julian Jonsson, Portfolio Manager at Alecta.
– The Government has tasked Sida to mobilise private capital for development and by issuing a guarantee to responsAbility, Sida reduces the risk for investors, which in turn reduces the uncertainty for them to invest in new markets and environments, says Kalle Hellman, Deputy Head of Unit for Guarantees and Catalytic Financing for Development, at Sida.
Microfinancing the SDG’s
By mobilizing private capital this Social Bond will contribute to progress in areas of the 2030 Agenda that need urgent attention. It will finance an extensive loan portfolio, originated by responsAbility, that addresses SDGs in emerging markets.
The purpose of the loans is to finance both short-term and long-term needs of the borrowers, including working capital, inventory or receivables financing, as well as capital expenditures.
– Our, and other large investors, investments in social bonds have increased during the last couple of years. As long as we find good structures with credible partners such as responsAbility, we will continue to invest in products that gives a stable return and enables solutions to pressing challenges. The problem, from our point of view, is that there is a lack of suitable products to invest in, not a lack in capital or will, says Julian Jonsson.
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