Denmark’s biggest pension fund is among 24 Danish institutional investors that have decided to sue banks Morgan Stanley and Carnegie in relation to the collapse of Danish shipping fuel company OW Bunker.
ATP has filed the lawsuit as part of a consortium including units of PFA Pension, PenSam, Lærernes Pension and PensionDanmark. Other pension funds involved in the consortium are AP Pension, Unipension and Sampension.
The funds are suing the two issuing banks for IPO prospectus liability.
The Danish institutional investors lost DKK767m (€103m) after investing on in shares in the company “on the basis of a prospectus which was insufficient in material aspects”, ATP said.
Tomas Krüger Andersen, ATP’s head of legal for investments, said: “The consortium has decided to extend the group of defendants to include the issuing banks Morgan Stanley and Carnegie.”
This decision was based on new information in extensive exhibits from the bankruptcy estate, which the investors were only given access to this spring, he said.
“We believe that the banks knew about OW Bunker’s speculative activities and that the banks contributed to misleading investors,” he said, adding that, against this background, ATP believed the banks may be liable to pay damages.
Lawyers Bruun & Hjejle are representing the investors in the proceedings.
In June 2015, the investors said they were suing OW Bunker itself. In April 2016, ATP said it had not decided whether to expand the suit.
The action is pending before the Danish Eastern High Court.
LD awards alternative credit mandate
In other news, Danish pension fund LD is expanding its allocation to alternatives through a DKK1.1bn alternative credit mandate to be run by US asset management firm Apollo.
LD said its alternative investment allocation, which is now less than 5% of its overall assets, would increase substantially with the new mandate.
Claus Buchwald Christjansen, LD’s CIO, said: “We have been talking to the American manager for a long time and chose them because they were simply the best suited, and at the same time enormously innovative in their ability to be able to manage liquidity and hedging of alternative credit investments.”
LD said its demands regarding alternative credit investments were different from those of most other pension funds in Denmark. Firstly, the investments had to have a high level of cashflow, and secondly, the investment time horizon was significantly shorter than that normally seen in the sector.
LD said it had designed a hedging portfolio with Apollo that would protect the investments against losses in the case of negative developments in financial markets.
“In spite of that, we expect a relatively high return on these investments,” said Buchwald Christjansen.
LD has total assets of around DKK43bn at the moment but this is expected to shrink to DKK25bn by 2024. It is a non-contributory pension fund based on a one-off sum transferred by the government in 1980. Half of its members have now passed the age of 60, when they can withdraw their assets.