LONDON Danish pension funds and the government will invest in a state fund to finance projects to fight climate change in developing countries, one of the investors said in a statement.
PensionDanmark said it had committed 200 million Danish crowns ($37 million) to the fund, while a further 1 billion crowns will come from pension funds PKA and PBU, private investment fund Dansk Vækstkapital, the Investment Fund for Developing Countries and the Danish government.
The fund is expected to receive another 200 million crowns from private investors in a second investment round, giving it a total of 1.4 billion crowns at its disposal.
The Danish Climate Investment Fund will run for four years and have an annual return of 12 percent, PensionDanmark said.
It will invest in projects which reduce greenhouse gas emissions such as renewable energy, energy efficiency and transport schemes in emerging economies from Africa to Asia.
It will also finance projects which help communities and geographies prepare for the effects of climate change, such as disaster preparation and coastal management.
The fund will only finance projects which have a Danish financial interest, meaning that a Danish partner must co-invest or participate as a supplier of equipment or technology.
"We are expecting the Danish Climate Investment Fund to deliver solid returns to our members in the coming years, while serving to boost the standing of Danish companies in the new growth markets," said PensionDanmark's chief executive Torben Möger Pedersen.
PensionDanmark has 642,000 members and had 16 billion euros of assets under management at the end of 2011. It expects those assets to exceed 24 billion euros by 2016.
($1 = 5.4656 Danish crowns)
(Reporting by Nina Chestney; Editing by Mark Potter)