Norselab expands into credit with flagship fund Meaningful Impact High Yield

Leading Nordic impact investment platform, Norselab, is launching its first actively managed high yield fund. Meaningful Impact High Yield is the first high yield fund in the Nordics dedicated to impact, classified as an Article 9 under the SFDR, and with an AIF structure. Nordic top-performing portfolio manager Tom Hestnes and Ole Einar Stokstad, Norway’s leading credit analyst, are at the helm of the initiative.

Tom Hestnes and Norselab teamed up earlier this year to launch a series of impact-focused credit funds. Meaningful Impact High Yield is the first manifestation of that ambition. The fund aims to pool professional and institutional investors with the same long-term investment horizon and seeks to invest in companies that bring a clear positive contribution to sustainability while at the same time generating superior financial returns.

“Norselab wants to direct more capital into impact investing. Entering into credit was thus a logical next step for us. With Tom on board, we’re in a strong position to generate positive absolute returns whilst putting more established companies on the impact track to build the world’s new economy”, says Erik Syvertsen, CEO of Norselab.

Fund launch

The open-ended fund will be launched on November 30 with an AUM in excess of NOK 500m with a target to reach NOK 2bn by the end of 2023. The AIF structure will cater for scalability where it can maintain a consistent investment strategy for up to NOK 10bn.

“We are stoked having raised +NOK 500m for the first close in such a volatile environment. It is one of the largest first close volumes for any open-ended Nordic high yield fund, ever. It shows investor confidence in our approach, and we shall manage that trust with utmost respect”, says Tom Hestnes, Managing Director Credit at Norselab.

Nordic High Yield

The market’s demand for impact products in the Nordics is rising, as a new generation of investors is determined to make an impact. To meet this demand, Norselab’s credit and impact teams have pioneered a framework for impact in High Yield.

Fundamental credit assessment and impact due diligence are both at the core of our investment decisions. The credit team performs the financial risk and ESG assessments, while the impact team assesses the positive impacts of the issuers, focusing on their revenue-generating products and services. The assessments are based on Norselab’s Meaningfulness Philosophy and follow a multi-lens methodology to build a comprehensive picture of a company’s positive contributions to the UN Sustainable Development Goals (SDGs).

“We aim to establish a new standard for impact in high yield. Thanks to our data-driven and knowledge-based approach, we can bring impact to the credit space and contribute to driving the change we need for a sustainable future”, says Maria de Perlinghi, Chief Impact Officer at Norselab.

Meaningful Impact High Yield is also classified as Article 9, so-called “dark green” under the SFDR.

“We will propel the Nordic credit market into the impact era. Our ambition is to take the lead in driving and developing a new Nordic High Yield loan documentation template, including sustainability measures with an actual positive impact. We shall not trade return for impact, or vice versa. We shall achieve both”, says Tom Hestnes, Managing Director Credit at Norselab.

“I am excited to be taking our ideas based on fundamental research into portfolio investment decisions, and also to be working proactively with impact investments, together with Tom Hestnes”, says Ole Einar Stokstad, Senior Portfolio Manager Credit at Norselab.

Impact Activism

Over the past decade, the Nordic High Yield market has matured into an internationally recognized marketplace for bond financing, attracting both issuers and investors from around the world. Norselab’s credit team wants to keep driving the momentum.

Tom Hestnes, formerly one of the largest and most active high yield fund managers in the Nordics, has been a key driver for this shift. He has previously addressed and defended situations concerning fair treatment in the capital structure and corporate governance. Now, together with Norselab, he will also expand the activism to impact.

“We’re still chasing outperforming returns based on the same investment strategy, but with the right lens”, adds Tom Hestnes.

Meaningful Impact High Yield is Norselab’s flagship fund on credit and an important milestone in Norselab’s expansion across asset classes.

Key Facts

• Name: Norselab Meaningful Impact High Yield
• NAV (at launch): 10,000 NOK
• Fund launch: November 30, 2022
• Base Currency: NOK
• Currency Share Classes: NOK / SEK / USD & EUR (both hedged and non-hedged)
• Asset class: Nordic High Yield Corporate Bonds
• Investment structure: Alternative Investment Fund
• Fund type: Open-Ended Investment Company
• Fund classification/SFDR: Article 9
• Portfolio Managers: Tom Hestnes & Ole Einar Stokstad
• Fund Manager: KBA
• Investment Management Company: Norselab Investment Management AS