Danish pensions giant ATP shuns local infrastructure due to lack of PPPs
EUROPE - Danish pensions giant ATP says all DKK8.6bn (€1.2bn) of its infrastructure investment is outside Denmark and blames this foreign focus on the lack of attractive public private partnerships (PPPs) at home.
The pension fund said it is involved in infrastructure projects abroad totalling DKK110bn, with its stake in each ranging from a few percent to 30%.
Its infrastructure investments in Australia, the US, the UK, Spain, France and other countries often function through PPPs.
ATP said: "The concept of PPPs is a broad one. ATP participates most often in PPP co-operations where the partnership leads to ATP in conjunction with one or more partners owning and operating the infrastructure over a long concessionary period.
"If ATP still has not invested in Danish infrastructure, it is certainly not because we want to go outside Denmark. On the contrary, the explanation is that this type of investment is simply not in place in Denmark."
Ulrik Dan Weuder, deputy director at ATP and in charge of infrastructure investments at the DKK554bn pension fund, said ATP often owned infrastructure abroad in close co-operation with public authorities.
"In Denmark, it can be a barrier for investors if they have no expectation of the market's future size and do not see broad and long-term political will for PPPs," he said.
Weuder also stressed that, in PPPs, as in every other investment, there should be a profit for ATP's members that reflected the investment risks.
The debate around PPPs in Denmark usually centred on the cost of borrowing, ATP said.
"The efficiency gains stemming from the innovation, effectiveness and ongoing running and maintenance of the installations - which the private sector does best - are rarely mentioned," it said.
But good infrastructure projects should not be abandoned just because the public sector has problems getting the budget for them, when the private sector is ready to get involved, it said.
Citing Bob Officer - professor of financing at the University of Melbourne, who has worked for ATP - the fund said not only could PPP projects ease the burden on state finances, but the long-term planning horizon of infrastructure projects often suited private sector players.
"Pension funds, which have to consider pensioners many years into the future, are very well-placed as partners in infrastructure investments, which typically have a long life-span," Officer said.
Weuder said ATP was not particularly attracted to infrastructure investments where it acted simply as a lender.
"We would much rather be in the picture as an innovative partner so we can exploit our expertise in risk management and gain a high risk-adjusted profit for the benefit of ATP's members," he said.