Three pension funds in Denmark are investing a combined €220m in a new private equity fund targeting defence-sector companies across Europe, anchoring the first vehicle from a newly-formed team based in the Danish capital.
PensionDanmark, AP Pension and AkademikerPension announced last night that they are making the new buyout-focused fund ETNA possible by investing €100m, €70m and €50m, respectively.
Peter Stensgaard Mørch, chief executive officer of PensionDanmark, said: “ETNA’s focus on the growth and scaling of small and medium-sized enterprises in the European defence industry allows us to create attractive returns for our members’ pensions while contributing to the security of society and Europe’s innovative power.
“That’s why we have chosen to take on a central role in making the fund a reality,” said the CEO of the DKK376bn (€50.3bn) labour-market pension fund.
The pension fund trio said defence investments were a focus area in European policy, with the European Commission having presented its ReArm Europe Plan this Spring, which aims for member states to mobilise €800bn to increase defence budgets.
The Draghi report had previously found that three quarters of European Union countries’ defence purchases came from suppliers outside the union, the funds stated.
At AP Pension, CEO Bo Normann Rasmussen said his pension fund believed the kind of innovative companies ETNA would cooperate with would play a decisive role in Europe’s development of the “credible defence” it needed to ensure future peace and security.
“Given the great potential that lies in the fund, I am very pleased that PensionDanmark has taken the initiative for the partnership,” he noted.
The pension funds said that with its size and focus, the fund was expected to become a significant player in a European context, where there were currently very few private equity funds dedicated to defence investments.
The parties behind the announcement described ETNA as a “European private equity fund dedicated to strengthening Europe’s resilience through investments in the defence industry, cybersecurity and protection of critical infrastructure”.
Its founders are a Danish-German team consisting of former partner at CataCap Frederik Busch, Florian Funk, former partner at EQT, and Wolff van Sintern – who has been senior partner at McKinsey and the consultancy’s global co-head of defence sector activities.
ETNA’s senior adviser team comprises several people with experience in top roles in the Danish military as well as in NATO, and includes former head of department at the German Ministry of Defence Katrin Suder and former Danish minister of defence Jakob Ellemann-Jensen.
While the fund’s main focus is buyout investments, taking majority stakes in companies and working actively to develop them, it will also be able to take minority stakes and make growth equity investments, the pension funds said.
Last week, a consortium led by PensionDanmark won a public-private partnership contract to build new army barracks in Denmark for an undisclosed sum, beating a consortium comprised of other pension funds, including IndustriensPension, AP Pension and AkademikerPension.
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