Thursday 13 December 2018

KBI fund aims to tap green opportunities

Eoin Fahy is chief economist at KBI Global Investors
Eoin Fahy is chief economist at KBI Global Investors

Gretchen Friemann

KBI Global Investors has added a new strategy to its ethical investing business as the Dublin-based firm attempts to capture some of the vast volumes of global institutional money pouring into this space.

The new strategy focuses on the listed "sustainable" investments - meaning environmentally responsible - infrastructure space.

It's targeting companies which specialise in water and clean energy infrastructure as well as farmland, food storage and transportation, such as grain storage.

According to Eoin Fahy, KBIGI's chief economist and investment strategist, this latest venture is a natural extension of the firm "deep expertise" in this area.

Mr Fahy said the new strategy, which with just €8m behind it, remains in its infancy. It aims to deliver a dividend yield of between 3.5pc and 4.5pc.

According to Colm O'Connor, senior portfolio manager at the firm, the emphasis on sustainability marks KBIGI's listed infrastructure strategy out from the crowd.

He argued that while many investors have leapt into listed infrastructure funds, most of this cash has backed assets such as toll roads and pipelines.

Recent industry reports indicate the amount of assets managed to environmental, social and governance objectives has surged past €20 trillion as responsible investing assumes a more central role.

KBIGI, which runs an €8.5bn diversified global equities strategy, alongside a near €1bn-plus natural resources portfolio, pitched its tent in the sustainability space decades ago.

KBIGI has a preference for infrastructure companies that are in regulated markets.

Mr O'Connor pointed to Gladstone Land, a US real estate investment trust that owns about 72 farms valued at close to $531.6m, as an example of the financial and environmental, social and corporate governance (ESG) attributes the firm is targeting.

As consultants increase pressure on pension funds and global asset managers to deploy more capital into ESG investments, KBIGI hopes its latest strategy will tap into rising demand and boost its reputation as a pioneer investor.

The firm recently won a 'buy' recommendation from prestigious consultancy firm Cambridge Associates for its water strategy, which forms part of the natural resources fund.

The endorsement helped pull in fresh mandates from five North American institutional investors, and it is understood another 10 are likely to follow suit.

In December 2015 KBIGI won a €1bn-plus investment mandate from the world's third largest pension fund, Korea's National Pension Service Fund.

Irish Independent

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