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IPE special report May 2018

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IPe-symposium: Industriens eyes EM private equity

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DENMARK – Industriens Pension, €5bn Danish scheme, says it might look at entering the emerging market private equity arena.

Fixed income portfolio manager Mads Peter Thomsen told today’s IPE-symposium on emerging markets investing: “On the private equity side we already have a global portfolio there but we are looking into and it might be included in the medium term or short to medium term – so on the private equity side we might start there.”

Industriens got into emerging market equities in 1999 shortly followed by emerging market bonds. It current has 5% of its total assets in each asset class, he told the online event.

Unlike fellow panellist APK of Austria, Thomsen explained that Industriens’ approach is the same for both emerging markets equities and bonds. APK treats emerging market equities as part of its regional focus.

Industriens has two managers in bonds and two in equities. “All the mandates are global mandates and quite broad mandates.”

All are actively managed. He said it looks quite easy for managers to beat our benchmarks “so we’re quite happy about that”.

The fund saw a structural case for emerging markets investments, as opposed to a case built on ideas about economic cycle.

He pointed out that the fund likes managers who can perform in positive markets. “Some of the mangers we have talked to say they’ll get alpha in negative market – we’re not happy about that” – because tactical asset allocation should ensure the fund is not in negative markets to begin with.

“We like managers that can perform in positive markets – we’ve been through something there.”

Thomsen suggested that new investment opportunities would arise, such as African countries, though there were problems investing directly into them.

Henrik Gade Jepsen, chief fund manager at fellow Danish fund ATP, noted that emerging markets had overall been a good experience for the fund.

He said that emerging market debt is a non-homologous asst class with a large asymmetry of information – which provides opportunities for good managers to add alpha.

And he said there was a good case to be made for investing in local currency deb.

“The bottom line is ATP has a small allocation to local currency debt but we’re definitely looking into it.”

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