PGGM is keen to expand holdings in assets that currently fall between its infrastructure and private equity portfolios, reducing operational risk while still taking an equity stake in projects.
Ruulke Bagijn, CIO for Private Markets, said the €187bn pension manager could build capacity in the area if pension funds showed an interest in potential assets, but she denied there were plans to grow its in-house private equity team.
If PGGM implements the strategy, it would be likely to target assets with less operational and financial risk than those currently within its PE or infrastructure portfolios, while still allowing it to take an equity stake.
Bagijn told IPE: “It’s somewhere in the space between private equity and infrastructure where we think we can take new steps, where we can do that with our in-house team, build capacity to invest in that area ourselves – and thereby build portfolios that sit very well with the pension funds we invest with.”
When asked to provide examples of which assets would fall between the private equity and infrastructure portfolio, Bagijn explained that they were likely to be non-core infrastructure holdings.
She said PGGM’s stake in Antwerp’s LBC Tank Terminal – acquired in 2012 by a group including several Australian investors, PGGM and APG – would qualify if bought today.
She also said motorway service stations could theoretically form part of such a portfolio.
Moto Hospitality, the UK’s largest service station operator, was recently acquired by the Universities Superannuation Scheme.
“Those type of assets, where we do think they have the same drivers as the infrastructure they are related to, and have partially the same value drivers – such as traffic – are very suitable long-term investments.”
Bagijn stressed PGGM had no intention of hiring more in-house management staff and would instead focus on maximising the value it could offer to the pension funds with which it worked.
She cited as an example the manager’s ongoing concern about misaligned incentives between asset managers and asset owners.
She said the faster-than-desired turnover of infrastructure assets held in funds was one of the reasons it decided in 2010 to begin investing directly in the asset class.
PGGM has recently acted in conjunction with a group of sovereign wealth and pension funds, buying into car-lease company LeasePlan.
It has also been taking on construction risk in a number of public/private partnership projects, due to a joint venture with Royal BAM that recently saw it contribute towards a sea lock at the entrance of the port of Amsterdam.