Swedish pension provider Skandia is investing $100m (€91m) in a sustainability blended-finance fund set up by Allianz Global Investors and the Dutch development bank FMO. Named the SDG Loan Fund, it is targeting resources at sectors key to climate transition in developing countries.

Lars-Göran Orrevall, Skandia’s head of asset management at the Swedish pensions firm, said: “This investment fulfils Skandia’s ambition to achieve a good return for our savers, as well as significant sustainability effects.

“We are excited to work with our partners on this blended finance, an innovative structure that plays a critical role in addressing the financing gap in developing countries,” he said, adding that the three sectors targeted by the loan vehicle – energy, financial institutions and agriculture – were central to global society’s climate transition.

FMO, the Dutch entrepreneurial development bank – a state-controlled public-private partnership with commercial banks, trade unions and others – said the fund had mobilised $1.1bn of investor capital to advance the United Nations Sustainable Development Goals (SDGs) in emerging and frontier markets.

“Investors in the fund, including Allianz, FMO and Skandia, are providing capital for high-impact, SDG-aligned loans to local companies and projects across Latin America, Asia, Africa and Eastern Europe,” it said.

Allianz GI is managing the SDG Loan Fund and FMO Investment Management originating and managing the loan portfolio, and the John D. and Catherine T. MacArthur Foundation, has committed a $25m guarantee for credit enhancement, FMO said.

The Dutch bank said the fund – an Article 8 fund under SFDR regulations – was able to have large-scale and multi-sector reach because of the first loss investment from FMO.

At Skandia, Orrevall said that, historically, it had been challenging for many institutional investors to invest in projects in developing countries.

“We strongly believe in this form of financing, and hope it can also help bring about socially important and long-term investments here in Sweden as well,” he said.

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