Finnfund-backed impact vehicle reaches first close at €76m

Posted on: 17 June, 2020 at 6:39 PM

The OP Finnfund Global Impact Fund I has reached a first close of €76 million. As the first Finnish impact fund to invest in emerging markets, the fund targets significant sustainability impacts in addition to profits.

Investors in the fund include Finland’s Church Pension Fund, Security Trading Oy, Oy Julius Tallberg AB, the Finnish Industrial Union, the Finnish Municipal Foundation, the Finnish Red Cross, OP Life Assurance Company Ltd and Finnfund. The fund’s target size is €100 million.

“The successful first closing shows that investors are interested in promoting sustainability and emerging growth markets even during the COVID-19 pandemic. Even though investors are currently cautious and will carefully consider long-term investments, the impact fund attracted more interest than we could have anticipated,” says Tuomas Virtala, head of asset management for corporate and institutional customers, OP Corporate Bank.

The fund targets substantial positive impacts on, for instance, climate change, food security, gender equality, and the availability of financing. OP Finnfund Global Impact Fund I focuses on three sectors in developing countries: renewable energy, financial institutions, and sustainable agriculture. The fund’s net profit goal is 8–12% (IRR).

The fund will only invest in projects with an expected return that corresponds to the risk, and that can also have a significant impact on sustainability. The first investments under consideration would target innovative food production in East Africa and fund female-owned businesses in Asia.

“Impact investing is not charity but aimed at having a positive impact alongside competitive investment yields. This is the only long-term way to organise financing to resolve sustainability challenges. It is encouraging that some of the world’s largest asset managers have got involved in impact investing,” Virtala continues.

“Finnfund is one of the fund’s anchor investors. The fund utilises our long-standing expertise in identifying suitable investments. Having followed the field, I strongly believe in the growth of impact investing as, in addition to profits, investors want to promote solutions to sustainability challenges,” says Markus Pietikäinen, chief investment officer of Finnfund.

OP Finnfund Global Impact Fund I will make its first investments over the summer. The fund’s second round of funding will be organised in the autumn.

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