Dutch pension asset manager APG and Rabobank have invested €800m between them in sustainable corporate loans via investment platform Colesco Capital, they announced today (Tuesday, 28 January 2025). The loans will be made to companies in Western Europe, with a special focus on the Netherlands.

The exact amounts the pension provider and the cooperative bank have committed have not been disclosed.

Colesco, an investment platform specialising in sustainable loans that was established by Rabobank in 2023, is in talks with a number of other investors, including pension funds, about an investment in the platform. In total, it hopes to raise up to €1.5bn, its director Danny Vroegop told IPE.

APG is making the investment on behalf of its pension fund clients ABP, Bpf Bouw and APG’s staff pension fund, even though ABP recently told APG it can no longer invest for other clients from around the year 2030.

According to Menno van den Elsaker, head of private credit at APG, it has not yet been discussed what will happen to the investments at Colesco Capital when that happens.

Three themes

Colesco Capital will give out loans to companies in Western Europe that are active in at least one of three themes: the transition in the food industry, the energy transition and ‘inclusive society’.

Vroegop explained: “By the latter, we mean companies that are working on making healthcare or education more accessible, or on digitising services.”

The minimum amount of each loan has been set at €50m. Van den Elsaker has not agreed to any ‘hard targets’ with Colesco when it comes to the share of Dutch companies in the loan portfolio, but he expects this to be at least 50%.

The investment should thus contribute to the goal of ABP, APG’s majority owner, of having €30bn in impact investments by 2030, of which €10bn in the Netherlands.

housing insulation

Source: iStock

Colesco Capital will give out loans to companies in Western Europe that are active in the transition in the food industry, the energy transition and ‘inclusive society’

ILX

APG has been expanding its investments in private credit in recent years. For example, in 2022 and 2024, a total of more than €1bn was invested on behalf of ABP and Bpf Bouw in a fund managed by ILX, an asset manager specialising in loans in emerging markets.

In the new Dutch pension system, pension funds will likely invest even more in the category, expects Elsaker.

“In the new pension contract, private credit is fairly favourable in terms of risk compared to the old DB [defined benefit] system. So we expect higher allocations,” he said, expecting an annual return on the investment at Colesco after costs of 7-8%.

The first two loans have now been granted, to the Dutch maintenance company Circreate and to Dunlop Protective Footwear, a manufacturer of protective footwear.

“Circreate will use that money to make homes of housing corporations more sustainable. This contributes to the energy transition and also has a social character, because people with a small budget are also helped to become more sustainable,” Vroegop said.

Safety footwear indirectly contributes to the energy transition through an investment in safety in the workplace, he added.

Article 8+

At least half of the loans to be provided must be qualified as sustainable according to the definition of the European Sustainable Finance Disclosures Regulation (SFDR).

“And the rest must be lent to companies that are on their way to becoming sustainable,” Vroegop noted.

This means that Colesco more than meets the definition of Article 8 in the SFDR, which states that an investment must promote sustainable characteristics.

Vroegop said: “In the end, it may well be that we turn out to be Article 9 (dark green), but we don’t want to pin ourselves down on that in advance because investments in companies that are not yet very sustainable but are undergoing a transition towards that are also important. Because we will largely invest in sustainable loans, we prefer to speak of Article 8+.”

In addition to a regular management fee, Colesco Capital also charges a performance fee that is only paid out if the return exceeds a certain level. But half of that performance fee will depend on whether the companies in which investments have been made have also achieved certain pre-agreed sustainability goals.

“These are specific to each company, but often have to do with their CO2 emissions. Another example could be the amount of recycled material a company uses,” Vroegop explained.

This article was first published on Pensioen Pro, IPE’s Dutch sister publication.