Aviva Investors has launched a new £1bn fund, offering direct investment into nature-based solutions alongside real estate and infrastructure assets.
The Aviva Investors Climate Transition Real Assets Fund – which the firm said was one of the first of its kind in the industry – will provide investors access to climate-focused solutions across European real estate, infrastructure and forestry assets, while delivering a net annual return of approximately 8% over rolling five-year periods and targeting net zero carbon status by 2040 or sooner.
Aviva said it had already established a strong pipeline of investment opportunities, as well as a “substantial level” of investor capital, which it expects to deploy over the coming 12 to 18 months. The fund has been initially seeded with £425m of investor equity, which could be leveraged up to around £1bn of firepower.
The fund will target investments that help accelerate, and benefit from, the transition to a low-carbon economy, including solar, on-shore wind and the active decarbonisation of inefficient real estate assets.
Chief investment officer of real assets at Aviva, Daniel McHugh, 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.”
Aviva said that carbon removals in the fund will be generated by the planting of new trees and not through the purchase of carbon offsets. It said that direct investment of this nature helped to remove emissions from the atmosphere at the same time as generating a return for investors. The fund will also seek to deliver social impact in infrastructure and real estate investments, said Aviva, 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 its £48.7bn real assets platform by 2040.
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