Dutch NN-FMO Emerging Markets Loans Fund overshoots first close target at USD 250 million

24/04/2018

NN Investment Partners (NN IP) and FMO Investment Management’s NN-FMO Emerging Markets Loans Fund (the 'Fund') saw strong Dutch and international institutional demand at a first close of USD 250 million, overshooting its minimum target by 25%, due to four key investors from Sweden and the Netherlands. Dutch development bank FMO established FMO Investment Management which allowed FMO to scale up impact investing by providing investors access to its deal flow. The cooperation with NN IP provided a next stage through the establishment of the Fund.

The Fund starts with a first close of USD 250 million allowing investors to immediately benefit from the significant portfolio of loans made up by FMO for the Fund. A second close is foreseen later this year as the proposition is easily scalable to USD 750 million due to FMO’s annual new loan commitments of more than USD 2 billion per year.

This impact fund enables institutional investors to co-invest alongside FMO in loans to financial institutions, renewable energy projects and agribusiness companies in emerging and frontier markets. It combines measurable social and environmental impact, a moderate risk profile and likely a stable, attractive financial return.

There is increasing demand for this type of investment solution, which can be related to a number of UN Sustainable Development Goals (SDGs)*, such as the focus on reducing poverty and hunger, providing affordable, clean energy and creating jobs. In particular, impact investing gained momentum as a result of the Paris Agreement and the broader adoption of the aforementioned UN Sustainable Development Goals. Investors increasingly realise that they can achieve impact without compromising on their other investment criteria - positive ESG impact and financial return can definitely go hand in hand.

Magnus Billing, CEO of anchor investor Alecta, commented: ”We are long-term investors, with a tradition of combining active ESG integration and a cost-efficient asset management. To us, this is a good example on how we can fulfill our duty to create the highest value possible for the occupational pensions, as the Fund meets both the required rate of return and creates measurable impact aligned with the 2030 Agenda for Sustainable Development Goals.”

Next to the anchor investor Alecta the fund received an important investment from the IMAS Foundation, which is a sister foundation to the INGKA Foundation — the owner of INGKA Group, which in turn owns the majority of IKEA's department stores globally.

The Fund is a relatively new product and encourages to look for solutions from outside investors’ usual thinking patterns. First of all, this Fund is a closed-end fund aimed at qualified investors that invests in loans, for which there is no publicly tradable market. This means that for some investors it falls into the category Alternative Fixed Income or Private Debt. However, investors can also view this Fund as a less liquid alternative within Emerging Markets Debt, with an emphasis on the positive effects within the area of ESG, which allows them to increase their allocation to impact investing or sustainable investing.

Hester Borrie, Head of Client Group International at NN Investment Partners, adds: “We are proud to partner with FMO in bringing this innovative impact investing fund to the market and broadening our range of sustainable investment strategies. Having worked as an impact investor in emerging markets since 1970, FMO’s network and experience are unparalleled. This co-operation combines the strengths of FMO as a leading impact investor and NN IP as an institutional asset manager with a strong franchise in alternative credit, emerging markets and sustainable investments.”

*The Fund supports several SDGs, in particular 1, 2, 7 and 8.

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NN-FMO Emerging Markets Loans is a Luxembourg securitisation fund (‘fonds de titrisation’, the “Fund”) having the form of a co-ownership, which is managed by its management company NN Investment Partners Securitisation S.à.r.l. established in Luxembourg under the Luxembourg Law of 22 March 2004, as amended. The Fund does not have legal personality. The Fund does not qualify as an Alternative Investment Fund (“AIF”) as defined in the AIFM directive or an Undertaking for Collective Investment in Transferable Securities (“UCITS”) as defined in the UCITS directive. The Fund is a closed-ended fund. The Fund has not and will not be registered with the Financial Services Supervisory Authority in the country of interest. Consequently, neither the Fund nor its Manager are subject to regulatory supervision in the country of interest. As a consequence, the units of the Fund will not and may not be offered, sold, advertised or otherwise marketed under circumstances which would constitute a public offering of securities. Any offer or sale of the units of the Fund shall be made pursuant to a private placement exemption as defined under the local law of the country of interest.
This communication is not directed at and must not be acted upon by US Persons as defined in Rule 902 of Regulation S of the United States Securities Act of 1933, and is not intended and may not be used to solicit sales of investments or subscription of securities in countries where this is prohibited by the relevant authorities or legislation. This communication has been prepared on the basis that all offers of the Units will be made pursuant to an exemption under the Prospectus Directive and the Luxembourg law on prospectuses for securities of 10 July 2005, as implemented in member states of the European Economic Area, from the requirement to produce a prospectus for offers of the units of the Fund. We recommend to read the Private Placement Memorandum before investing in the Fund so as to not take unnecessary risk. The Private Placement Memorandum is available free of charge upon request. This communication and information contained herein has been distributed only to a limited number of recipients and is strictly for private use by its holder. This communication must not be copied, reproduced, distributed or passed to any person other than the recipient without NN Investment Partners B.V.’s prior written consent.

About the author

Hester Borrie

Hester Borrie

Chief Client Officer of NN Investment Partners

Experience since 1994

Previous work experience: Hester began her career in Corporate Finance and Capital Markets at MeesPierson / Fortis Amsterdam in 1994. She then moved on to work for Morgan Stanley Investment Management in London and Amsterdam in 1998, initially in the role of head of sales for the Benelux area, promoted to run Northern Europe in 2001. Between 2005 and 2008 she held the role of Managing Director and Head of sales for EMEA. In 2009 she returned to the Netherlands to take up the role of Global Head of Sales and Marketing for Robeco Group. During this time she was instrumental in doubling the AUM and responsible for new strategic initiatives in Australia, UK, Italy, US Offshore and Singapore.

Education: Minor in Italian Language, History and Literature, University of Amsterdam, 1988. Masters in Economics, University of Amsterdam, 1994.

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