Denmark’s pensions and insurance lobby said the sector had some 23% of total assets in unlisted investments in the middle of this year after significant expansion in recent years, and said such alternative assets are seen having still larger weightings in the next few years.
Insurance and Pension Denmark (IPD) published a report this morning on the industry’s unlisted investments, which it said was aimed at creating increased transparency about the matter.
Kent Damsgaard, chief executive officer of IPD, said: “It is an area that has been subject to criticism, so we want to show how the companies work with the segment and the way in which the field is regulated – because it is clearly regulated like the rest of the market.”
Unlisted companies, which covered everything from housing, commercial properties, entrepreneurial companies, wind turbines and other forms of energy production and infrastructure, were important cogs in the economy, IPD said.
“You have to remember that the vast majority of the world’s assets are unlisted, and therefore it is also completely natural for our industry to invest in the area in order to expand the overall investment universe,” Damsgaard said.
Back in 2015, unlisted assets made up around 16-17% of Danes’ pension assets and today the figure was 23-24%, he said, corresponding to some DKK750bn, IPD said.
In its report, the assiciation said there was a broad expectation that in the next three to five years, unlisted assets would grow further as a proportion of pension funds’ total investments.
But it was not realistic for unlisted assets to constitute 40-50% of pension firms’ investments – the proportion that unlisted assets made up of total global assets – because investing in them required considerable resources and skills, IPD said.
Resources were necessary both for prior screening and examination of potential investments and in terms of ongoing work to monitor and follow them up.
The Danish FSA has had a sharp focus in the last few years on ensuring pension providers value their unlisted assets realistically.
In July it ordered ATP and other pension funds to change their processes around the revaluation of alternative assets such as private equity, infrastructure and illiquid credit.
IPD’s report addresses the topic of valuing private assets at length, inter alia emphasising that prices of listed assets do not necessarily reflect their value.
It also said the FSA’s investigation in the spring of 2023 showed some providers needed to establish clearer criteria for the market conditions under which they should reconsider the valuation of their unlisted assets.
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