In a mould-breaking move, the two largest Dutch pension funds ABP and PGGM have made a bid to take over specialist Nationale Investeringsbank (NIB) and acquire the 35% shareholding owned by the state. We are buying into a bank and combining some of the interests of the two funds,” says Roderick Munsters of PGGM, the Dfl80bn (E36.3bn) fund of the Dutch health and welfare sector.
Two specialised activities of the bank will be spun out into a private equity and an asset management operation, specialising in structured finance. The funds will transfer their operations in these areas to the two new companies, which will be based in Utrecht; the bank will continue to work from the Hague.
The funds’ interest in the bank and these two companies will be held through a holding company owned on a 50/50 basis. At the start, the total amount in-vested in the private equity venture will be Dfl5.3bn, making it the Neth-erlands’ biggest operator in the sector. “About six people from ourselves and PGGM will join the private equity group,” says Jean Friijns of ABP, the Dfl270bn fund for the Dutch civil service. The company will be investing mainly in Europe and the US.
The asset management operations will be much bigger with an initial capital of around Dfl50bn. The focus here will be on structured investment, says Frijns, and will include institutions’ mortgage and banking portfolios and other asset-backed securities. The company will be developing structured financial products. “These provide opportunities for extra returns where the grass has not been mown from under one’s feet,” Frijns adds.
ABP is already a large player here with Dfl20bn in assets and will be moving a team of around 20 people in this area to the new operation, compared with PGGM’s four or so. The European credit analysis teams for the new European bond markets of both funds will be located here.
“It is a possibility that for structured finance and private equity, the service could be offered to third parties,” says Munsters. “But we would want to have it working like a Swiss clock first.” As to whether the deal could re-sult in the funds providing more broadly-based asset management to outsiders, Frijns says: “Maybe - but it is too early to make statements about this.”
This is the first time that the two funds have co-operated this closely and Munster refuses to be drawn on future joint activities but adds categorically: “It will never be that the two funds will merge.”
The intention is to finalise transaction by mid May, at which point the funds hope to control 60% of the voting shares. At a price of Dfl66 per share, the offer values NIB at over Dfl3.5bn. One local asset manager comments: “As far as we can see, it is a done deal.”