(London) – Aviva Investors, the global asset management business of Aviva plc (‘Aviva’), has announced the launch of the Aviva Investors Climate Transition Real Assets Fund. The fund will aim to provide various investor groups, including defined contribution (DC) schemes, with access to climate-focused solutions across the breadth of the European Real Assets universe - principally direct real estate, infrastructure and forestry assets.
The Climate Transition Real Assets Fund will be managed by a team from across Aviva Investors’ Real Assets platform, utilising underlying investment desks and a robust top down asset allocation process to identify best relative value. The Fund will aim to deliver a net annual return of approximately 8% per annum over rolling five-year periods, whilst targeting net zero by 2040 or sooner.
Aviva Investors has already established a strong pipeline of investment opportunities, as well as a substantial level of investor capital, which the team expects to significantly deploy over the coming 12 to 18 months. The fund has been initially seeded with approximately £425m of investor equity which, combined with the ability to leverage up to 50% of loan to value, will generate approximately £1bn of investment capital to deploy. Opportunities targeted by the fund will be those helping to accelerate, and benefit from, the transition to a low-carbon economy, such as, solar, on-shore wind and the active decarbonisation of inefficient real estate assets.
Daniel McHugh, CIO, Real Assets, at Aviva Investors, said:
“One of our key objectives as a business is to ensure we are delivering the investment products and outcomes that our clients demand. As a committed investor, acting and supporting the transition to a low-carbon and climate-resilient world is not only consistent with our values, it is absolutely in line with what our clients now expect. There is a huge opportunity to drive our physical built environment toward net zero through Real Assets, where significant investment capital and firepower can make a direct and very material impact through increasing renewable energy, reducing emissions from the overall sector and removing carbon through nature based solutions.”
The Climate Transition Real Assets Fund is one of the first of its kind in the industry to offer investors direct investment in nature-based solutions alongside real estate and infrastructure. Carbon removals in the fund will be generated by afforestation (the planting of new trees), and not through the purchase of carbon offsets. Direct investment of this nature helps to remove emissions from the atmosphere and benefits nature, whilst generating a return for investors. The Fund will also seek to deliver social impact in infrastructure and real estate investments, through providing job opportunities and training, and procuring goods and services locally.
The fund is the fourth in Aviva Investors’ Climate Transition range, with the business having launched funds focused on Global and European Equities in 2020 and its Climate Transition Global Credit Fund in May this year. In January 2021, Aviva Investors announced its plans to reach net zero emissions across the whole of its £48.7 billion Real Assets platform by 2040, as it seeks to improve the sustainability of new and existing building stock across the UK and support clients in addressing the climate transition within illiquid assets.
In March, Aviva plc announced its plan to become a net zero carbon emissions company by 2040, the most demanding target of any major insurance company in the world, as part of its plan to become the UK’s leading insurer, and contributing to a sustainable economic recovery.
The fund is structured as a UK Non-UCITS Retail Scheme (NURS) and will be a Fund of Alternative Funds (FAIF), investing into underlying asset-class specific Luxembourg RAIF vehicles, liquid assets and forestry. This structure enables life companies and other investors to provide capital to long-term asset classes which can otherwise be extremely challenging to access.
Mark Meiklejon, Head of Real Asset Investment Specialists, at Aviva Investors, said:
Pierre Biscay, Head of Customer Investments at Aviva , said:
“As a significant early investor in the fund, we are delighted to be participating in this exciting product launch. We see this as another step towards our commitment to become a Net Zero company by 2040 and look forward to seeing the strong impact we expect this fund will have both towards a sustainable world and in enhancing customer returns.”