Dutch asset manager APG is investing €75 million on behalf of its pension fund client ABP, in a blue bond issued by Italian multi-utility company A2A. The bond, designed to improve Italy’s water infrastructure, aims to help save approximately 630,000 meters cubed of water annually. APG said water-related bonds are here to stay.
The company said this investment reflects a growing trend toward bonds with increasingly specific characteristics, especially those focused on water—whether drinking water quality, drought, or flooding.
“Water as a theme—whether related to drinking water quality, drought, or flooding—is here to stay,” said Shahzad Memon, Portfolio Manager Responsible Investment Fixed Income. “An investment like this, in a company committed to improving water infrastructure, will likely attract interest from other investors who want to learn more….We expect the market for impact bonds to grow in the coming years, and this deal is an important step in that direction.”
A2A provides solutions in energy, environmental services, and water management. The bond aims to modernize water infrastructure—such as pipelines, meters, and sensors—with a specific focus on water conservation and cleaner water.
A2A’s bond is part of a trend toward bonds with increasingly specific characteristics, said Mermon. “It started with the rise of labeled bonds. Those gave us assurance that the proceeds would be used for green projects, and we could assess whether those projects aligned with our client’s objectives. However, the scope of labeled bonds was still quite broad. As ABP’s responsible investment framework becomes more precise—focusing on climate, biodiversity, and impact—not all labeled bonds fit our client’s criteria anymore. This impact investment in A2A proves there is indeed a opportunity for these highly targeted bonds that contribute to ABP’s impact investing ambition.”
“What makes this investment unique is that APG, on behalf of ABP, acted as cornerstone investor and agreed on a one-to-one basis how the €75 million—part of a larger €155 million financing round with five other investors—will be allocated and how its impact will be reported,” said Michael Bosman, Senior Portfolio Manager Credits. “Thanks to this investment, A2A will go beyond what is legally required in terms of water conservation and water quality.”
