DENMARK - Dansk Vækstkapital, the DKK5bn (€670m) state-backed venture capital fund agreed between the Danish pensions industry and the government, has moved a step closer to investing with the appointment of a board.
Lars Nørby Johansen - currently chairman of the Danish Growth Council, which advises the government - has been appointed chairman of the board, the Economics and Business Affairs Ministry said.
Economics and Business Affairs Minister Brian Mikkelsen said: "I am very satisfied we have found seven particularly experienced and competent individuals, who will lead Dansk Vækstkapital and so manage the task of converting the venture capital into real investments in entrepreneurs and small and medium-sized enterprises with growth potential.
"I expect the board to be able to present an investment strategy within a few months that will make it possible to carry out the first investments."
Other members of the board are Birgit Nørregaard, Nina Movin, Michael Ring, Viggo Nedergaard Jensen, Asbjørn Berge and Peter Erik Hansen.
Back in January, the government signed an agreement with ATP, LD and industry association Forsikring & Pension (F&P) to set up the DKK5bn venture capital fund, in the form of investment company Dansk Vækstkapital.
Government-initiated talks had begun in August 2010 to find a way of providing SMEs with much-needed funding.
Altogether, the funds pledged by the pension funds - plus three loan and guarantee schemes established as part of the 2011 Finance Act - mean as much as DKK10bn in funds for the targeted businesses, the ministry said.
Nørby Johansen said he agreed it was important to get the funds released and having an effect within the businesses quickly.
"At the same time," he added, "we will ensure a reasonable return on investment, in line with the market."
Peter Damgaard Jensen, managing director of industry association F&P, said the selection of board members was a good start for the venture capital fund.
"For us it was crucial the new board consist of professional people who know how the fund should best invest to live up to the aim of more entrepreneurs and more growth," he said.
The new members bring solid experience and a broad range of capabilities onto the board, he said.
Damgaard Jensen stressed that, in addition to putting funds to work in Danish growth businesses, it was also part of the board's task to make the very most of pension savers' investments.
"It will inevitably be a balance that requires a meticulous selection of businesses with the right potential," he said.
According to the current investment model published by the government, the DKK5bn of funds pledged by the pension funds will consist of at least DKK1.25bn in equity capital and a minimum of DKK3.75bn in loans.
The loan portion will be directed via Vækstfonden, a separate fund, while the equity capital will go directly to the Dansk Vækstkapital investment company.
Dansk Vækstkapital will then invest the funds at its disposal in businesses via venture funds, small-cap funds, mid-cap funds and mezzanine funds.
This will be supplemented from the state side with growth loans, growth guarantees and mezzanine guarantees.
Conditions underpinning the investment model include the notion that investment should build on free-market investment principles, ensure a good return for pension savers and be time-limited, as well as comply with EU state aid rules.
The ministry said it had used headhunting firm Russell Reynolds Associates to recruit the new board members.