Dutch PGGM pension fund invests in micro-finance

* Second micro-finance investment

* Expects 20 percent return a year

LONDON, July 17 (Reuters) - PGGM, the fund manager of the second largest pension scheme in the Netherlands, said on Friday it has made its first investment in a micro-finance private equity fund.

The manager, in charge of the 75 billion euro ($105.8 billion) Pensioenfonds Zorg en Welzijn, will deploy $60 million in the Grassroots Capital's Global Microfinance Equity Fund over the next three years.

Microfinance is provided to low-income individuals and businesses who cannot turn to mainstream banks and other financial institutions to borrow money.

Last year the pension fund invested 30 million euros in micro-finance debt. Both investments are part of its 200 million euro micro-finance investment programme, announced last year.

"We believe that microfinance private equity can generate a competitive investment return while helping to increase the availability of credit to lower income people in emerging markets," said Alex van der Velden, head of responsible equity strategies at PGGM.

He told Reuters he expected returns to be in the region of 20 percent a year.

"An additional $60 million of equity capital from PGGM will enable microloans to over one million working poor across the developing world," David FitzHerbert, managing partner of Grassroots Capital, said. ($1=.7089 Euro) (Reporting by Cecilia Valente; Editing by Jon Loades-Carter) (cecilia.valente@thomsonreuters.com; +44 (0)20 75423570; Reuters Messaging:cecilia.valente.thomsonreuters.com@reuters.net)