Denmark’s PKA announced it is investing DKK22bn (€3bn) in private equity over the next three years via a new private equity (PE) buyout fund of funds that its subsidiary Institutional Investment Partners Denmark (IIP Denmark) is setting up on its behalf.
The DKK330bn labour-market pension provider said the fund, PKA Private Funds IV, would ultimately invest in unlisted small and medium-sized companies, and that the commitment would increase the total capital IIP managed for its parent company by 40% to just over DKK77bn.
Michael Nellemann Pedersen, PKA’s CIO, said: “We want to support the opportunities for small and medium-sized companies in the Nordic region, Europe and the USA.”
He added that investing in unlisted, growing businesses through private equity funds was an important part of PKA’s strategy, and that the firm could support the companies’ development, while providing strong returns for its members as a long-term investor.
Copenhagen-based PKA said it had built up a mature portfolio of unlisted investments with IIP since its inception in 2012 – previously named PKA AIP – and with this new fund it would reinvest much of the return from existing investments, while also expanding its commitment to the subsidiary.
“IIP has delivered very satisfactory returns, and this has happened at low cost compared to what is normally seen in the private equity area,” said Nellemann Pedersen, adding that PKA believed IIP would continue to provide good returns from the new capital.
Anette Eberhard, managing partner at IIP, said: “With a new big commitment from PKA in the back, we are gaining even more scale.”
IIP said PKA Private Funds IV was a buyout fund to be deployed from 2020-2023, and would include allocations to both primary fund commitments and co-investments.
Investment sizes would typically range from $50m to $150m for fund commitments and $15m to $60m for co-investments, it said on its website.
The majority of the portfolio will comprise private equity commitments, with a minority reserved for infrastructure investments, according to IIP.
IIP also announced the promotion of four members of its team, with Brian Schwartz being appointed senior partner, and Jeanette Engdal, Mads Harvits and Rune Ulbak becoming partners.
Along with its rebrand a year ago, IIP announced it was seeking third-party institutional investors to invest in its private markets funds, adding that it expected assets to grow to DKK100bn over the following two years.