Just six months after its initial investments, Franklin Templeton Investments, the U.S.-based investment management firm, has announced the expansion of its first social impact infrastructure fund targeting European real-estate. According to a news brief from IPE Real Assets today, the Franklin Templeton Social Infrastructure Fund (FTSIF) has newly acquired properties in Aachen, Stockholm, Brighton, London and Copenhagen, bringing its portfolio holdings to nine properties valued at more than EUR 200 million.
IPE Real Assets also reported today that the Swiss sustainable infrastructure fund manager SUSI Partners is halfway to its target capital raise of EUR 300 million for its second energy efficiency fund. The fund, which remains open to institutional investors through the end of 2019, has already invested in seven projects in as many European countries, including energy-efficiency upgrades in public and private buildings, and retrofitting of street lights.
Despite record on-track issuance for green bonds—debt instruments used to finance projects (increasingly infrastructure) that benefit the environment—a new Pension&Investments article has found that demand among institutional investors for green bonds is outstripping available supply. Global new issuance of green bonds is expected to set a new record of $250 billion this year, and compared to a total $389 billion in such bonds outstanding today. Issues of market size, standard verifiability, liquidity and duration diversification remain hurdles that the emerging green bond market faces in attracting capital from large institutional investors such as pension and sovereign wealth funds.
ESG bond issuance is also on track to set records in Japan, according to a piece in today’s Nikkei Asian Review. In the first two fiscal months of 2019 alone, Japanese domestic issuance of environmental, social and sustainability bonds totaled 163 billion yen, compared with a record of 653.9 billion for all of 2018. Demand for these investments is particularly high with Japan’s shinkin credit associations, credit cooperatives and educational corporations. And with higher demand—increasingly from the retail investor segment—driving yields on Japanese domestic green bonds lower, Nikkei reports that institutional investors in Japan have pivoted to stocks and bonds on foreign markets for ESG exposure.