Danish pension fund manager PKA is investing DKK250m (€34m) in a new “micro-loan” fund backing financial services for poor and middle-class customers in Latin America, Africa and Asia.
Peter Damgaard Jensen, chief executive of the DKK250bn pensions manager, said: “From PKA’s perspective, we can combine a number of important goals by investing in micro-loans.”
Micro-loans benefited the poor, he said, especially women, who typically had no other way of borrowing money and fighting their way out of the worst poverty.
“In addition, we get a good return on our members’ pensions,” he said.
The fund – Maj Invest Financial Inclusion Fund II – is run by Danish manager Maj Invest, which has secured a total commitment of DKK870m into the fund.
It invests directly in financial institutions providing the loans and other financial services, and has already made three investments in Peru, India and Africa. The manager expects to make six investments in total, PKA said.
The loans these banks grant to customers are used to start businesses or for investment and working capital to expand companies, and therefore contribute to growth and more jobs, the Danish investor said.
Kasper Svarrer, managing partner for financial infrastructure at Maj Invest, said the market for this type of investment was growing partly because of digital development which made it easier and cheaper for banks to reach a large number of customers.
PKA said it was the largest investor in the fund, which follows the same strategy as its predecessor Danish Microfinance Partners, also managed by Maj Invest.
PKA was also the main investor in this prior fund, which granted loans to 5.5m people in countries including Peru, Bolivia, India, Senegal and Côte d’Ivoire, and produced an annual return of around 20%.
PKA runs three Danish labour-market pension funds in the social and healthcare sectors.