Danish pension funds join forces for push into alternatives
Four Danish pension funds are planning to invest tens of billions of Danish krone in alternative credit, capital funds, infrastructure and forestry over the next five years.
Danske Capital will act as an adviser to the funds, which manage a combined DKK500bn (€67bn).
The four funds – Danica Pension, a pension and insurance provider; DIP, the pension fund for engineers; JØP, the scheme for lawyers and economists; and Lægernes Pensionskasse, the doctors’ pension fund – said they expected alternatives would become a larger portion of their portfolios in future, yielding higher and more stable returns in combination with more liquid assets such as listed equities and bonds.
The funds said they saw particularly exciting alternative investment opportunities in areas where banks no longer had the same capacity to lend due to tighter regulation in the wake of the financial crisis.
The new collaboration has already resulted in the first investment in alternative credit, where the pension funds, together with Goldman Sachs, will provide loans directly to businesses.
Torben Visholm, chief executive at JØP, said the cooperation would give the funds access to better investment terms due to economies of scale.
He said the agreement would allow the funds to invest better, faster and in a wider range of assets.
The joint venture’s large investment capacity will produce cost advantages and better investment terms, as well as positioning the participating pension funds to enter into public-private partnerships (PPP), they said.
Søren Kolbye Sørensen, chief executive at DIP, said his pension fund had in recent years entered into a number of innovative collaborations with other institutions to reap cost advantages as a result of economies of scale.
At the beginning of the year, DIP and JØP established a joint investment department, and the agreement on alternatives is another step in that direction, he said.