30 Jun 2020 15:39

SEB funds invest in green bonds in Sri Lanka

From left: Camilla Löwenhielm and Hanna Holmberg

SEB's Microfinance Funds and the bank's Impact Opportunity Fund have invested 1.3 billion Sri Lankan rupees (7 million US dollars) in their first green bond. The money will be used to finance green loans from Pan Asia Banking Corporation in Sri Lanka.

Today, SEB’s Investment Management unit manages six microfinance funds, as well as the broader Impact Opportunity Fund with capital totalling around 1 billion dollars. The microfinance funds previously financed Pan Asia’s lending to small and medium-sized enterprises.

“In view of SEB's pioneering work with green bonds, we are pleased to expand our social investments to include environmentally sustainable investments in Sri Lanka,” says Camilla Löwenhielm, Microfinance Portfolio Manager at SEB.  

The bond will finance a new loan product, “Haritha Sammana”, whereby Pan Asia offers loans for new green initiatives and projects in Sri Lanka. The size of the loans offered ranges between 650 and 13,000 dollars, with maturities between one and ten years.

“Sri Lanka’s agricultural sector has a great need to transform to more sustainable farming, and Pan Asia, with its leading products, plays an important role in this work. The new loan product can, for example, finance climate-smart intermediates, and the use of domestic seeds, solar energy and drip irrigation. It is also expected to strengthen SMEs by offering loans for solar energy and energy-efficient investments,” says Camilla Löwenhielm.

Hanna Holmberg, who in mid-May took up a Portfolio Manager role within microfinance at SEB, emphasises the importance of green bonds and microfinance funds for emerging markets.

“The green bond makes it possible for a local commercial bank to access long-term financing in the local currency, which is extremely important in emerging markets. Green bonds and microfinance funds then facilitate further capital inflows that can be invested in many environmentally sustainable projects with a positive economic and social impact on people's lives.”