Dutch civil service scheme ABP, Europe’s largest pension fund with €466bn in assets under management, is looking to increase the share of its investments in domestic infrastructure, its chair Corien Wortmann said. The fund is specifically eyeing investments in new infrastructure projects.

ABP only currently invests 5% of its assets in the Netherlands, with the bulk of this in fixed income and mortgages. “Our members find it important that their pension assets contribute to economic growth, employment in the Netherlands,” Wortmann said in a double interview with Gerard van Olphen, the CEO of APG, its asset management arm, with the Netherlands’ biggest newspaper De Telegraaf on Monday.

According to Van Olphen, a pension fund can ’kill two birds with one stone’ by investing more at home. “Investing in the direct living environment of our members and employers does not just contribute to a good pension but also to a more liveable Netherlands. That counts twice.”

The pair want to especially invest more in Dutch infrastructure, but are currently seeing a lack of opportunities to do so. They hope a new €20bn public investment fund to be set up by the Dutch government will change this.

This new fund is expected to fund public investments to strengthen the structural growth potential of the Dutch economy, and its priorities will be debated in parliament this week.

Public-private partnerships

ABP and APG hope the fund will work in tandem with private investors such as pension funds to increase its leverage. “We would like the new growth fund to follow the example of the European Green Deal and focus on setting up public private partnerships,” an ABP spokesperson told IPE.

“Unfortunately though, the growth fund seems exclusively focused on funding public investments,” she added.

Asked about specific domestic projects that ABP would like to invest in, Wortmann mentioned heating networks to facilitate the energy transition and light rail connections between large cities. ABP’s infrastructure portfolio was valued at €12.5bn at the end of 2019. It includes investments in Brussels airport, in solar parks and in toll roads all over the world, including the Sydney ring road.

At the moment, the only infrastructure project in the Netherlands that ABP invests in is the renovation of the Afsluitdijk, a coastal protection barrier that connects the provinces Noord-Holland and Friesland.

“We would like to do more of this kind of project in which the government gives the guarantees needed for private investors like us to get involved,” the spokesperson said.

ABP does not yet have a concrete investment target. “Our first priority is to convince the government to realise more public-private cooperation is indeed desirable,” the spokesperson added.

“We believe the government is not able to raise sufficient money to finance all necessary public investment in the Netherlands, especially since the Covid-19 crisis has strained public budgets.”

Separately Jaap van Dam, the CIO of the Netherlands’s second-largest asset manager PGGM, suggested Dutch pension funds could indeed invest more at home. “I would say if you can financially contribute to your home turf, why shouldn’t you? I think at least in the Netherlands we’ve overdone this international diversification a bit,” he told the IPE Nordics seminar on Monday.

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