Denmark’s biggest pension fund is setting up a new division at its Hillerød headquarters to focus on direct investments in domestic companies to hold for the long-term.
In an announcement this morning, ATP said the unit, ATP Long Term Danish Equity, would have a three-strong investment team, and invest in new and established firms.
Bo Foged, the DKK907bn pension fund’s chief executive officer, said: “As ATP is now making more direct long-term investments, we are involved in ensuring the growth of Danish companies, and expect to support Danish economic growth and jobs, while the returns will benefit everyone in Denmark.”
ATP’s board has so far allocated DKK6bn (€807m) to this area over the next three years, the fund said – money it said would “support the development of new or current Danish companies”.
The pension fund said it saw opportunities to generate good risk-adjusted returns by securing long-term capital for more domestic businesses so they could develop and scale up.
By investing in this way, ATP said it hoped to help create the large Danish companies of the future, which had “global potential”.
On its rationale for the new project, the statutory pension fund said Danish firms were uniquely positioned to contribute solutions and know-how internationally as the global green transition gathered pace, and many also needed capital and skills to make green changes and digital transformations themselves.
Alongside this, it said there were more than 20,000 Danish companies facing successions in the next few years, some of which would need capital and help to pursue bigger international ambitions.
To start with, ATP said the new unit would target businesses in the IT, MedTech, pharma and renewable energy sectors that were facing “facing business and/or succession-related transformations”.
“Our focus will also be on profitable companies with a turnover of at least DKK250m where we can get ownership stakes of between 20-49%,” it said.
ATP had a watershed moment 10 days ago when parliament passed the new ATP law, approving changes to its business model which will allow it to, inter alia, direct a extra fifth of new contributions to a wide range of assets rather than investing that money in the bonds-and-swaps hedging portfolio it does now.
In 2020, ATP received total annual contributions of DKK10.7bn.