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IPE special report May 2018

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Nordic roundup: PKA, Genan, AI Pension, PP Pension, Alecta

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Danish labour-market pensions administrator PKA has secured a rescue deal with bank creditors to its troubled private equity investment Genan and put a new chairman in place at the tyre-recycling company.

Without giving details of the agreement reached between PKA and the four banks that had lent to Genan and Deloitte – the audit firm involved – PKA’s managing director Peter Damgaard Jensen said: “It is an agreement all parties are satisfied with.”

PKA took Genan over last August, raising its stake in the company to 97%, and said it has been trying ever since to find an overall economic solution to secure a future for the business.

In September, PKA said it wrote down the value of its investment in the company to DKK250m in the first half of this year, having originally invested around DKK1bn in it.

Damgaard Jensen said the deal meant PKA could now “look ahead” and that Genan could concentrate on what it did well.

“We at PKA have always emphasised the importance of saving Genan because we believe in the business idea, and because it is the best way to secure our investment and our members’ pensions,” he said.

Peter Thorsen, who has a background as a director and investor in a number of Danish companies, is to take over as chairman of Genan, replacing Jens Kampmann, PKA said.

PKA’s investment director Michael Nellemann Pedersen will remain on the supervisory board of the company in the transition phase.

One of the supervisory board’s first tasks will be to find a new and permanent chief executive to replace CFO Henrik Olesen, appointed interim chief executive on 1 December.

Discussions had been held with the Public Prosecutor for Serious Economic Crime over the role in Genan of the company’s founder Bent Nielsen, PKA said.

Meanwhile, Swedish occupational pension funds AI Pension and PP Pension have announced they are to merge.

AI Pension, previously known as Arkitekternas Pensionkassa, and PP Pension, the pension fund for the press and media, are to become one pension fund on 1 January 2016, according to plans by the boards of both pension funds.

The decision still requires the approval of both boards and the Swedish financial regulator Finansinspektionen, the funds said.

Kjell Norling, chief executive of PP Pension, and Maritha Lindberg, chief executive of AI Pension, said in a joint statement: “There are major changes in the regulatory area, which increases demand and affects our costs negatively.”

The merger will allow them to increase cost efficiency, reduce vulnerability, increase quality and improve their competitiveness, the two chief executives said.

AI Pension and PP Pension have been operating in the competitive market for ITP1 and ITPK workplace pensions provision since 2007 and 2013, respectively, and no longer have monopolies in the provision of these, the funds said.

Both pension funds were the insurer for ITP2 within their industries.

In other news, Swedish occupational pensions provider Alecta has reported a 14.9% return for its defined contribution (DC) pension Alecta Optimal Pension over 2014, down from 17.3% in 2013, but revealed solvency had weakened.

Alecta’s defined benefit (DB) pension ended the year with a 12.3% return, up from the previous year’s 9.8%.

It said the DC return outperformed the benchmark by 1.8 percentage points.

But the funding level of the DB pension fell to 143 at the end of December 2014 from 148 12 months earlier.

The group solvency ratio also dropped, and stood at 159% at the end of last year, down from 170% at the end of 2013.

“The reduction is due to falling interest rates, which led to increased provisions for the guaranteed pensions,” Alecta said.

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