Industriens Pension has been handed several official orders from the Danish financial watchdog to improve processes for managing its hefty private equity portfolio – and told to assess whether it needs more people in that part of its investment team.
The FSA (Finanstilsynet) published a statement yesterday regarding an inspection of the DKK234bn (€31.5bn) labour-market pension fund Industriens Pension’s private equity investments.
The watchdog addressed four issues in the statement – continuous monitoring of risks, risk reporting, resources and control of the fund manager’s valuation.
Regarding resources, the Danish FSA said it noted that the resources within the private equity team were assessed as low compared with the tasks involved.
“On that basis, the Danish Financial Supervisory Authority has ordered Industriens Pension to make a new assessment of whether the company has a satisfactory number of employees to handle the company’s private equity investments,” it said.
According to the FSA, Industriens Pension had DKK33.5bn in private equity investments at the end of last year, corresponding to 14.4% of its overall investment assets.
Just over half of the company’s private equity portfolio consisted of investments in buy-out funds, the authority said, and slightly less than half in venture funds – plus a small proportion of other private equity investments.
The FSA also said it found Industriens Pension had not set clear requirements as to what design and frequency of reports it needed to receive from fund managers in order to carry out effective monitoring, and that no clear requirements had been set for the handling of information obtained from the fund managers.
“The Danish Financial Supervisory Authority has therefore ordered Industriens Pension to set requirements for the fund managers’ ongoing reports and to have sound administrative practice in relation to minutes and documentation of risk assessments,” the supervisor said.
The FSA, which said it picked four of Industriens Pension’s private equity investments for review, said its statement was one in a series of statements in connection with private equity focused inspections it was carrying out.
IPE has contacted Industriens Pension for a comment on the inspection report.
At the end of last week, the authority told PenSam to correct a range of private equity procedures.