Danish pension fund PKA is investing DKK6.4bn (€856m) in unlisted European companies, including DKK1.5bn in venture, as it seeks returns while supporting European growth and competitiveness.
The pension fund, which serves nurses, social educators, physiotherapists and pharmaconomists among others, said the investments would contribute to growth, jobs and development in Denmark and Europe.
“We do this first and foremost because we believe that it can provide a good return and contribute to high pensions for our members. But it is also important for us to support a stronger Europe. We see significant potential in unlisted European companies and in the investment environments that can help develop them,” said Jon Johnsen, chief executive officer of PKA.
The DKK1.5bn allocation to European venture companies will target smaller, typically young businesses with growth potential, which can use capital for product development, hiring and international expansion.
PKA said Europe significantly lags the US in access to venture capital. Citing Mario Draghi’s report on European competitiveness, it said 5% of global venture capital funds are raised in the EU, compared with 52% in the US.
“We are good at getting ideas and creating startups in Europe, but we find it more difficult to get them to grow into large global companies. All too often, we see that the most exciting young European companies end up in the US, partly because the investment environment and access to capital are better. We want to help change that. That is why we are earmarking billions for investments in European ventures,” said Johnsen.
The investments will be made through Institutional Investment Partners (IIP), which PKA founded and currently owns with Lars Larsen Group.
IIP has raised almost DKK21bn this year across three funds investing in unlisted companies. One fund will invest exclusively in Europe, while the other two will also allocate significant capital to European investments.
According to Maria Hjorth, managing partner at IIP, European companies can currently be acquired at lower prices than US companies.
“European companies can be bought at lower prices today than American companies. This is partly due to the fact that Europe lacks capital markets that can finance companies all the way to global growth. There is simply less competition for the talented companies. This creates some opportunities that we can use our experience and network to exploit on behalf of our investors.”
