Infrastructure 2015 - PensionDanmark
Rolling out the supply chain
Judge’s comment: “Good international as well as reasonable sector diversification, albeit focused on renewable energy, with evidence of being a first mover.”
Like many of its Danish peers, infrastructure is fast becoming a key asset class for the €23bn PensionDanmark fund. The urge and need to be at the forefront and continue to build on its successes in infrastructure continued in the period under review, with the scheme further diversifying its portfolio to the asset class, while identifying the strongest and best-in-class industrial partners to work with on the operational and maintenance side of the assets it acquires. All in all, PensionDanmark now has some €2bn invested in infrastructure.
With a close link to its ESG strategy, windfarms continue to dominate PensionDanmark’s exposure. It first invested in two domestic windfarms but is now venturing further afield and the latest allocation takes the scheme to Africa, where it has invested in the continent’s largest windfarm at Lake Turkana in northern Kenya. Consisting of a total 365 turbines spread across 160 square kilometres, the investment for the scheme amounts to €700m and the conditions of the location are considered ideal, with very strong and consistent winds sweeping the area creating an electricity output capacity that equals some 15% of Kenya’s overall supply. Production is expected to begin in 2017.
With the market for windfarm investments becoming increasingly crowded, PensionDanmark has further expanded its other infrastructure assets, including biomass energy plants and gas pipelines. Its first biomass investment came in 2013 when it acquired the Brite plant, which is under construction in the United Kingdom. This investment was managed by the Copenhagen Infrastructure II fund, a specialist vehicle created by PensionDenmark to help it streamline its infrastructure portfolio. With PensionDanmark as the lead investor in the vehicle, Copenhagen Infrastructure II now boasts some €2bn in commitments from 19 institutional investors from Norway, Sweden and the UK, making it one of Europe’s largest dedicated infrastructure funds.
PensionDanmark has further expanded its UK biomass investments with the acquisition of two similar assets at Brigg and Snetterton. The contractor and developer partnering PensionDanmark in these two investments is Burmeister & Wain Scandinavian Contractor A/S.
Other than biomass and windfarm electricity plants, PensionDanmark recently entered a joint venture deal with the Dutch national electricity transmission systems operator, Tennet, to finance the construction of an offshore grid that will channel the power generated by the DolWin3 offshore windfarm in the North Sea to customers in Germany. Planned to be up and running in 2017 with a maximum output capacity of 900MW, PensionDanmark’s investment in the grid, again through the specialist infrastructure fund it created, totals some €385m and represents a minority stake. Tennet will finance the largest portion of the construction costs, which are expected to be €1.9bn
Still in the North Sea, PensionDanmark has also recently committed some €171m to a Dutch natural gas pipeline network. This deal, concluded in early 2014, represents a 40% stake in NGT, which owns the pipeline developments that carry natural gas from the North Sea to a treatment plant in the Netherlands. NGT’s network comprises some 470km of offshore pipelines that deliver a daily amount of gas equal to 42m cubic metres.
Finally, in April 2015, the scheme further expanded the range of infrastructure it invests in with the acquisition of railway rolling stock. This involves an investment in Angel Trains, the United Kingdom’s leading train leasing specialist, which holds a portfolio of approximately 4,500 vehicles leased to train operating companies across the Great Britain. This commitment comes through its holdings in an AMP Capital specialist fund that now holds a majority stake in Angel Trains.
Founded in 1990
Defined contribution multi-employer pensions company
- active: 362,000
- retirees: 37,000
- Assets: €23bn
- one year: 10.5%
- three years: 10.2%
- five years: 10.3%
- Significant €2bn infrastructure portfolio
- Lead investor in €2bn Copenhagen Partners II which PensionDanmark set up
- Investments include windfarms, natural gas pipelines, biomass plants and railway rolling stock
- Ärzteversorgung Westfalen-Lippe Germany
- Industriens Pension PensionDanmark
- Lancashire County Pension Fund United Kingdom
- Douglas Crawshaw
- Benoit Fally
- Georg Inderst
- Richard Urban