DENMARK - Nine Danish pension funds are to invest some €63m in non-listed companies in less developed countries in a public-private initiative under which the Danish government will share many of the preparatory costs.
Under the scheme, the eight PKA pension funds and kindergarten teachers’ pension fund PBU, will make socially responsible investments in such countries as Tanzania and Vietnam.
The Danish foreign ministry will provide some €7m to cover extra costs related to investing in developing countries, including the identification of suitable companies, the conducting of pilot studies and education and training.
“The ministry has the local knowledge and the network of contacts that makes it easier to set up such ventures,” said PKA CEO Peter Damgaard Jensen.
The pension funds have established a fund, Private Equity Developing Countries, and Bank Invest has been named its investment manager.
The investments will be focused on local non-listed companies that need long-term capital for expansion. The term of the fund is expected to be 10 years.
“Venture capital is just as necessary in developing countries as support to education, roads and hospitals,” said minister for developing co-operation Ulla Tørnæs. “I am pleased that we have established such an innovative public-private partnership. The implementation of UN’s Global Compact principles in the investment strategy ensures sustainable and socially responsible investments in a number of developing countries.”
The ministry will focus on social, ethical and environmental conditions in the target companies. The idea is that, by involving the Danish industry and business community directly, the total transfer of resources to developing countries will increase.
“Without the partnership with the ministry of foreign affairs we would never have invested in such countries,” said Damgaard Jensen. “Costs would be much too high.”
He added: “It is our firm belief that investments in such markets will add positively to the return of our investments in general and hence increase the pensions paid out. To PKA there is no incongruity between a high return rate and socially responsible investments.
“This investment fits in very well with our intention to go more into private equity and to spread our investments to emerging markets,” he added. “It is also consistent with the fact that our members have requested a more offensive strategy regarding socially responsible investments.”