Ninety One launches debt strategy to target EM energy transition

Investment in clean energy in emerging markets must triple in the coming years

Global investment manager Ninety One has developed an Emerging Market Transition Debt (EMTD) strategy to catalyse investment into the EM energy transition.

The strategy – developed in collaboration with several global capital providers and advisors including Cambridge Associates and Wiltshire Pension Fund – aims to provide companies within emerging markets with commercial financing to support efforts in reducing real-world carbon emissions. It also plans to provide credit to high-emitting companies which have strong potential to reduce emissions.

According to Ninety One, this is a significant way to help bring about an energy transition, with the simultaneous goal of providing investors with an appropriate risk-adjusted return.

“Working closely with our foundational partners, we have purpose built this strategy not only to maximise real world impact, but also to deliver commercially attractive risk adjusted returns,” said Matt Christ, portfolio manager for EMTD.

“We are well positioned to lean into the secular growth tailwind created by the urgent need to decarbonise emerging markets. EMTD is proof-positive that investors shouldn’t have to sacrifice return for impact.”

According to the International Energy Agency, investment into clean energy in emerging markets needs to triple in the coming years, with estimates suggesting that China is the only emerging market that could self-fund a transition. Unlocking global capital, therefore, is vital.

Ninety One said that they will work with leading companies in multiple emerging markets to support their transition activities when the solution is brought to market in early 2024.

Nazmeera Moola, chief sustainability officer at Ninety One, added: “A successful global energy transition is not possible without a successful emerging markets transition. This is the only way we will collectively achieve net zero. Specifically, we believe there is an opportunity to support and grow the corporate sector, by using debt to finance the climate-oriented evolution of their businesses. This provides competitive returns with substantial climate impact.”