The SDG-focused emerging market private debt asset manager has also confirmed an increased allocation to its first fund from its cornerstone investors, including ABP, Europe’s largest pension fund.
ILX Management, an Amsterdam-based SDG-focused emerging market private debt asset manager, has announced the first close of its second fund after Danish pension funds Sampension and AkademikerPension committed $185m (€174m). ILX’ second vehicle will follow the same development finance private debt strategy as its first fund.
In addition, ILX said Dutch pension funds ABP, bpfBOUW and Pensioenfonds Vervoer have boosted their commitment to its first fund to $1.5bn, via their asset managers APG and Achmea Investment Management. The extra funds from its initial cornerstone investors came after the firm turned its first fund into an evergreen vehicle.
Both developments boosted total commitments across both vehicles by 60% to $1.7bn.
The successful fundraise was driven by a “desire” among pension fund investors in Europe, especially in the Nordics region and the Benelux, “to allocate to sustainable investments while getting risk-adjusted market equivalent returns”, Sophie Gioanni, head of investor relations at ILX, told Impact Investor.
The COP29 talks that started in Baku this week may lead to “other asset owners leading the way, and understanding that providing good returns and a good pension is great, but if there is no planet to live on, then that doesn’t work”, Gioanni said. “Our pension fund investors were very strict in the way that they did not want to give up on returns, but they decided that they didn’t want to give up on sustainability and impact either.”
Evergreen fund
Since its launch in 2022, ILX Fund I has committed $800m to 40 investments in 18 countries. The Dutch firm has co-invested alongside the International Finance Corporation (IFC), the European Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank and the Dutch Entrepreneurial Development Bank FMO.
The decision to move ILX Fund I from a ten-year closed-end fund to a revolving, evergreen-type structure fund was mainly driven by pension fund investors seeking “a permanent exposure to an asset class that they consider as core to their investment strategy”, Gioanni said. “Operationally, it’s much easier for them.”
In a separate press release, ILX said it was “in the process of arranging additional commitments with other leading pension fund investors” in both funds.
Both vehicles, which are targeting a combined fund size of $3bn, “will enable investors to flexibly allocate capital across attractive SDG and climate-targeted private debt investment opportunities in emerging markets”, while also benefiting from working with multilateral development banks and development finance institutions, ILX said.
ABP’s $1bn commitment
ABP, Europe’s largest pension fund, is the biggest investor in the first fund, with a $1bn commitment as part of its €30bn impact investment allocation.
The pension fund for employers and employees of government and educational institutions in the Netherlands “aims to increase its investments generating double returns through impact investing,” said Harmen van Wijnen, chairman of the board of ABP.
“We apply a strict definition for these investments, which first and foremost requires an appropriate financial return combined with a measurable contribution to positive social and environmental impact,” Van Wijnen said.
The development finance opportunities in emerging markets, through partnerships with institutions such as the World Bank (through IFC) and the Asian Development Bank are “highly impactful”, Van Wijnen said, adding that the progress since the start had been “remarkable and promising”.
Anders Schelde, chief investor officer of AkademikerPension, a pension fund for 170,000 Danish academics, called the investment “truly a win-win”. “With this investment, we can check off both return and responsibility. A wide range of developing countries gain access to capital, while our members receive a stable return,” Schelde said.
Henrik Olejasz Larsen, CIO of the Danish pension funds administered by Sampension, added: “Making financing available to emerging markets to achieve UN Sustainable Development Goals (SDGs) is an important agenda for our stakeholders but difficult to achieve in practice. The ILX platform with co-investments alongside international development banks is a good way to achieve this while balancing emerging market risks and return.”
