DENMARK - The DKK93bn (€12.5bn) Pensionskassernes Administration has awarded Goldman Sachs Asset Management a $100m private equity brief and said it is only half way to its target allocation to the asset class.
PKA, the third largest pension provider in Denmark, will invest in GS Private Equity Partners 2004 fund. No external consultant was employed in the selection process.
Michael Nellemann Pedersen, PKA’s chief investment officer, said the fund has so far invested in Danish private equity, but was now keen on a more international approach.
He said the fund, for employees in the public social and health sector, targets a 5% private equity allocation but has only allocated 2.5%.
The fund allocated DKK500m to Danske Bank's Danske PEP in 2002. Last year it allocated two mandates, each worth DKK250m, to Partners Group and Pantheon Investments.
GSAM will concentrate on the US and European areas, he said.
“This reflects PKA’s intentions to bring about greater diversification and to increase potential returns in the portfolio,” GSAM said in a statement.
GSAM explained that PEP is a fund of funds product consisting of 18 to 25 underlying private equity partnerships along with direct co-investments. GSAM said that PEP 2004 closed in February 2005 at $1.2 billion.
Caroline Bradley, GSAM’s Nordic institutional relationship management, commented: “Our principal focus is on creating portfolios of the highest-quality private equity funds.
“Given the long-term nature of the asset class, we look to establish a strategic relationship with our private equity investors, and build on that relationship over time.”
Nellemann Pedersen said PKA’s eight funds average asset allocation includes Danish and global equities (30%), bonds (50%), real estate (8%). Swaps and other instruments to protect investments from interest rates risks count for up to nine percent while the rest is invested in real estate.
Last January PKA group reported a 2004 pre-tax return of between 13.6% and 15.0%, putting the good performance down to its holdings of Danish equities.
GSAM said its Private Equity Group said it manages over $13 billion in committed capital across a range of primary fund-of-funds and secondary funds.