Denmark’s largest commercial pensions provider, PFA, announced it has invested DKK100m (€13.4m) in a small and medium enterprise (SME) private equity fund, Blue Equity III, which it said was different from traditional private equity funds.
The Copenhagen-based firm said the PE fund differed from traditional private equity funds “by partnering with company management and company owners on the joint further development of already well-functioning companies”.
PFA said the private equity manager Blue Equity – which typically invested in industrial and business services firms – also tended to take a 40-60% stake in companies, which the pension provider said was somewhat lower than traditional private equity funds.
Kasper Ahrndt Lorenzen, group CIO of PFA, said: “SMEs are the backbone of the Danish business community, and they do remarkably well compared to other countries.
“But in our experience the growth journey of many Danish SMEs only really picks up speed when they gain access to external capital, networks and knowledge,” he added.
PFA, which managed DKK730bn of assets at the end of 2020, said it had co-founded Blue Equity back in 2013 along with a consortium of institutional investors.
It said SMEs employed around two thirds of private employees in Denmark, but that over the last decade this segment’s growth had lagged that of large companies.
One of the reasons for this, the pensions firm said, was an inadequate framework for owners to maximise the potential of their companies by gaining investors, through product development, as well as through market expansion, for example.
Christian Møller, managing partner at Blue Equity, said his firm could help companies it invested take “the next important step” by using its know-how, large networks and capital.
“But this always has to happen in partnership with owners and management, because we don’t want to teach anyone how to run their business. We believe more in investing in people than in companies,” he added.
Blue Equity said its third fund, which was founded in May, was now fully-subscribed at its second and final closing with DKK750m of investments.