Together with the Danish state and three other large Danish pension funds, PKA is investing in a new fund that will achieve the UN’s global goals through investments in a number of the world’s poor countries.
The fund has been named the World Goals Fund II. It is being raised by the Investment Fund for Developing Countries (IFU). In addition to PKA, the investors are the pension companies PFA, P+ and PenSam.
Together, IFU, which is financed by the Danish state, and the four investors are putting 2.7 billion kroner into the fund. PKA is contributing an investment of 400 million kroner.
The money will be invested in the private sector in developing countries in Africa, Asia and Latin America and help support the green transition, contribute to better living conditions and at the same time create good returns for investors.
“We know that climate change is hitting the world’s poor countries hardest, and that it is here that investments are most needed. Yet, as a pension sector, we have far too few investments in those countries. It is not because we do not want to, but because it is difficult. The risk is great, and the investments are inaccessible. Together with IFU, we can lower the risk and get Danes’ pension money out and working for a better society, and that is why we have joined the Global Goals Fund II,” says Jon Johnsen, CEO of PKA.
The new fund builds on the experiences from the SDG Fund I, to which PKA also contributed. Both funds are part of the Danish effort to realize the UN’s 17 SDGs and are a unique public-private partnership, where public capital is used as leverage to mobilize risk-taking private capital for investments in developing countries.
The fund is structured in such a way that private investors have a first right to the first 6% of the return. In addition, an EU loss guarantee has been signed, meaning that the EU covers any losses for private investors in the Global Goals Fund II of up to DKK 535 million.
“Our most important task is to create good returns for our members, but we also want to contribute to a more secure and sustainable future through our investments. With the fund’s various protective measures, we can both create good returns for our members, and we can push the green transition and ensure better living conditions for the population in developing countries,” says Jon Johnsen.
The Global Goals Fund has proven its worth
The Danish government is pleased that Danes’ pension money can go out and work in places in the world where investment is most needed. This is according to Foreign Minister Lars Løkke Rasmussen, who was Prime Minister in 2018 and thus also helped launch the Global Goals Fund I.
“IFU’s first Global Goals Fund has demonstrated its worth and has made Danes’ pension savings grow in the service of a good cause. As a small open economy, we must focus on those parts of the world where there is growth – for example, Asia, Latin America and Africa. With IFU’s Global Goals Fund, we have an investment model that reduces risks and ensures returns and results. It is good for both Danes’ pension savings and for the climate when we create more investments in, for example, sustainable energy sources,” says Minister of Foreign Affairs Lars Løkke Rasmussen in connection with the launch of the fund.
The Global Goals Fund I is currently fully invested in 27 private companies in developing countries. The expected annual net return is 10–12%. The Global Goals Fund II is expected to have an annual net return of between 12-15%.
The target for the total capital commitment to the Global Goals Fund II is DKK 5 billion, with the remaining commitment expected to be raised in 2025.
The agreement on the Global Goals Fund II will be officially signed at a launch event at the Odd Fellows Palace today, attended by, among others, Minister of Foreign Affairs Lars Løkke Rasmussen.
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