PGGM to increase concentrated risk investments
NETHERLANDS - PGGM, the the second largest pension fund in the Netherlands, will double its concentrated risk investments in 2007, IPE has learnt.
Jelle Beenen, head of the pioneering portfolio of strategies team at the €86bn Dutch pension fund, told IPE: "The possibilities to add part of somebody else's concentrated risk exposures, particularly of financial institutions, in our diversified portfolio will grow in the coming year.
"It is difficult to say how much in terms of assets, as in fact opportunities occur on a case by case basis, but I think a doubling should be possible year-end 2007," he added.
"We have done a few deals with banks that have certain concentrated risks because they have sold a lot of a certain [structured] products to perhaps the retail market, for instance structures similar to click funds," explains Beenen.
If the risk becomes too large, PGGM then takes on part of that risk, for which it is paid an "attractive" compensation. These are often risks that are not yet in the fund's portfolio.
Beenen said also catastrophe bonds, in which the fund started investing last year, is one of the strategies that might grow over time.
These investments are part of the fund's portfolio of strategies, currently valued at around 2.9% of the fund's assets, which is dedicated to investments in beta assets with an alternative risk profile.
PGGM invests also, for example, in timber via the portfolio, which aims at "long term investments, where most would say ‘this is not for us'," according to Beenen.
Among other investments, this year PGGM invested in ‘clean technology', together with major Dutch fund ABP, and is the seed investor of Albright Capital Management, an investment firm linked to The Albright Group, a consultancy firm chaired by former US Secretary of State Madeleine Albright.
The aim is to eventually invest a total of 8% of the assets in the portfolio of strategies, "but because it is a question of looking for new opportunities which are interesting enough, there is no set final point, rather the opportunities need to be good," concluded Beenen.