In a new ground-breaking public/private partnership, a number of institutional investors and IFU on behalf of the Danish state have entered into an agreement worth billions to create green growth in developing countries and contribute to meeting the COP 15 goal to raise USD 100bn a year from 2020 for climate investments in developing countries. Denmark thereby takes a leading position when it comes to raising climate financing, which is decisive to ensure the necessary green transition in the developing countries and reducing global warming.
With the new agreement, the institutional investors, the Danish state and IFU will invest DKK 1.2bn in the Danish Climate Investment Fund with expected further commitments of DKK 200m from institutional investors, so that the fund will have DKK 1.4bn at its disposal.
Through project investments in developing countries and emerging markets the fund will contribute to reducing global warming and promote the transfer of Danish climate technology. Furthermore, the Danish Climate Investment Fund will provide its investors with a competitive return. The annual return is expected to be 12 per cent of the invested capital.
The invested capital of DKK 1.2bn consists of development funds (DKK 275m), IFU’s funds (DKK 250m) and funds from the institutional investors (so far DKK 675m). As the Danish Climate Investment Fund only contributes part of the total project financing in the individual projects, the total investment is expected to be in the range of DKK 8-9bn.
The Danish Climate Investment Fund is expected to assist small and medium-sized companies in gaining access to new countries and markets, either directly or as suppliers to larger climate projects.
The Danish Climate Investment Fund will invest in projects that directly or indirectly contribute to reducing greenhouse gas emissions, and in all the so-called DAC countries. Geographically the fund covers almost all countries in Latin America and Africa, the majority of the countries in Asia and a few countries in Europe.
IFU is the fund manager of the Danish Climate Investment Fund. IFU has invested in 800 project companies in 85 developing countries.
- The agreement between the government, the pension funds, Dansk Vækstkapital and IFU marks a win-win-win effort where we contribute to growth and employment in developing countries, fight climate change and provide better opportunities for Danish companies in new and difficult markets. I have high expectations for this ground-breaking innovative green partnership. I also hope that this agreement will inspire other countries to make similar financing mechanisms, says Rasmus Helveg Petersen, Minister for Development Cooperation.
- I am proud that we are able to present an agreement with a number of private investors. To reach the goal to raise USD 100bn annually from 2020 it is crucial that the private sector becomes involved in the climate agenda. With this initiative Denmark takes a leading role when it comes to a green transition in the developing countries, which will contribute to reducing global warming and hopefully be an inspiration to others, says Martin Lidegaard, Minister for Climate, Energy and Building.
- The Danish Climate Investment Fund is a completely new type of public/private partnership where state funds and private pension investments work together to benefit from the competences that Danish companies have in the area of climate and energy, and where there is great demand and market potential in many developing countries. IFU is a competent and experienced investor, and therefore we expect the Danish Climate Investment Fund to deliver a solid return to our members and to contribute to Danish companies strengthening their position in the new emerging markets, says Torben Möger Pedersen, managing director of PensionDanmark.
- PKA has positive experience from cooperating with IFU about investments in emerging markets, and with the partners in the new fund we therefore expect to create good results. By becoming a partner in the Danish Climate Investment Fund, PKA continues its significant focus on climate investments where we can contribute to reducing greenhouse gas emissions, support Danish companies and ensure a good return on the investment for our members, says Peter Damgaard Jensen, managing director of PKA.
- This type of investment fits our investment strategy for developing countries and emerging markets, and cooperating with IFU is an obvious choice because IFU is the most experienced Danish investor when it comes to direct investments in the developing countries, says Leif Brask-Rasmussen, managing director of Pædagogernes Pensionskasse.
- We believe that the Danish Climate Investment Fund is an interesting and relevant contribution to assisting small and medium-sized companies in becoming successful when they expand in developing countries, and as investors we can get a positive return on our investment, says Lars Nørby Johansen, chairman of Dansk Vækstkapital.
- For more than 45 years we have invested in projects which have had a positive impact in the developing countries and provided access for Danish companies to new markets, while IFU has continuously made a profit. We expect this to be the case with the new climate investment fund as well, says Tommy Thomsen, managing director of IFU.