Four Danish pension companies have entered into an agreement to establish a fund that will support the green transition in developing countries.

The agreement between PFA, PKA, P+ and PenSam means the state-owned Investment Fund for Developing Countries’ (IFU) Sustainable Development Goals (SDG) Fund II has raised a preliminary total capital commitment of DKK 2.7bn.

The target for the total capital commitment to SDG Fund II is DKK 5bn, with the remaining commitment expected to be raised in a so-called second close in 2025.

The fund will invest in the private sector in developing countries in Africa, Asia and Latin America and help support the green transition, contribute to better living conditions and create good returns for investors.

Through investments in the private sector in developing countries, the fund will contribute to realising the UN's 17 SDGs and ensure good returns for investors.

In a joint statement, PFA, PKA, P+ and PenSam, said: "We are fundamentally set up to create good returns for our members, but they also expect our investments to help create a more secure and sustainable future. Investing in sustainable companies in developing countries is not without risk, but with the fund's various protective measures, there is fertile ground for creating good returns for our customers and at the same time pushing the green transition and ensuring better living conditions for people in developing countries."

The new fund builds on the experiences from SDG Fund I. Both funds are part of the Danish efforts to realise the 17 UN Sustainable Development Goals and are a unique public-private collaboration where public capital is used as leverage to mobilise private risk capital to be invested in developing countries.

Foreign Minister, Lars Løkke Rasmussen, launched SDG Fund I during his time as Prime Minister back in 2018.

Commenting on the launch of SDG Fund II, Rasmussen said: "IFU's first SDG Fund has demonstrated its worth and made the Danes' pension savings grow in the service of a good cause. As a small open economy, we need to focus on the parts of the world where there is growth – for example Asia, Latin America and Africa. With IFU's SDG Fund, we have an investment model that reduces risk and ensures returns and results. It's good for both Danes' pension savings and for the climate when we create more investments in, for example, sustainable energy sources."

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