Danish roundup: ATP, LD, Forsikring, Danish Competition Authority
DENMARK - Denmark's government and three major pension players have signed an agreement to set up a DKK5bn (€670m) venture capital fund, which will be largely state-backed.
The government hatched the plan as a way of giving small and medium-sized enterprises (SMEs) access to capital.
ATP, LD and industry association Forsikring & Pension have been discussing the proposal with the ministry of economic and business affairs since last August.
Minister Brian Mikkelsen said: "We are setting up a new investment cooperation with the pensions institutes, which will ensure a significant increase in the amount of venture capital in Denmark."
Peter Damgaard Jensen, chairman at F&P, said the pensions sector was keen to contribute to creating growth.
"Therefore, we have said yes to being included in the agreement," he said. "Our hope is that the extra capital will give wings to those companies with growth potential, but are lacking capital right now."
However, pension funds had to balance many factors when investing peoples' pension savings, he pointed out, and their first and most important duty was to ensure a good return.
"The agreement respects this fine balance," he said.
Some details have been hammered out. According to the agreement, the government will set up an investment company, called Dansk Vækstkapital, the rules of which will be agreed by the four parties.
Among pension funds that were not signatories, PensionDanmark said it backed the agreement and expected to invest between DKK200m and DKK250m in the project.
Its managing director, Torben Möger Pedersen, welcomed the deal: "A good solution has been found, which increases the supply of venture capital to Danish businesses and at the same time limits the risk pension funds assume, with the state guaranteeing 75% of the sum invested.
"Now the agreement has to be realised in practice. When the precise terms are in place, we will present the case to our board."
In other news, the Danish competition authority has clarified its position regarding proposed legislation allowing ATP and LD to be given new powers to run banking operations.
The Danish government proposed this change in the law governing ATP and LD back in October in its programme of legislation for the new parliamentary year.
There has recently been a wave of public objections to endowing the two state-controlled pensions operators with these new powers, on the grounds that they would have an unfair competitive advantage over commercial providers.
In response to this, the Competition and Consumer Authority said it had not started an evaluation of competition implications of this law. But it said it would do this if the government put forward a concrete proposal for legislation.
It said: "The starting point for this evaluation will be whether, in principle, it will harm competition if ATP has free rein to run a financial company, namely a pensions business.
"The competitive effect will depend on how the concrete model is framed."