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Nordic roundup: PKA, Vietnam, BankInvest, Nordea

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EUROPE - Danish pension fund group PKA is channelling a further $48.1m (€34.7m) into private equity investments in Vietnam, saying its existing holdings in the region are on track to achieve far more than the hoped-for returns of 10-15%.

The group also said it aimed to boost exposure to emerging markets.

Jens Henrik Staugaard Johansen, head of private equity and infrastructure at PKA, told IPE: "The macroeconomic situation in that country is very interesting. You can draw a parallel with the development in China 10 years ago."

On Monday, PKA signed the LPA (Limited Partnership Agreement) for the new private equity fund Penm III, managed by Danish asset management company BankInvest.

The pension fund group is committing $48.1m to the fund, Staugaard Johansen said.
PKA already has a number of other private equity investments in Vietnam.

In 2006, it put DKK330m (€44m) into BankInvest's Penm I fund, following this in 2008 with a DKK275m investment in the manager's Penm II fund.

In 2009, PKA invested DKK100m in a Vietnam fund run by Maj Invest - an asset management company partially owned by PKA.

The funds are not limited to any particular industrial sectors, though there is some focus on consumer goods, Staugaard Johansen said.

"In Vietnam, there is a growth in wealth among the larger population, as we've seen in other countries in the region," he said. "This creates a lot of opportunities for growth across various segments."

Though the fund has been hoping to see returns on its investments in Vietnam of 10-15%, the holdings it already has are on track to achieve way beyond that, he said.

"What they've done in the past is repeatable," he added. "There is always risk, especially in those parts of the world where you have currency risk as well as political risk and ownership rights risk - but these risks are rewarded."

The pension fund intends to increase its exposure to emerging markets, and to Asian emerging markets in particular, he said, without giving a specific target.

PKA manages five labour-market pension funds in Denmark with total assets of around DKK150bn.

In other news, profit and income at Nordea's life and pensions business fell sharply in the third quarter as choppy markets weakened financial buffers and meant that, in Denmark, fees to shareholders could not be collected.

Operating profit from July to September at Nordea's Life & Pensions division was €10m, down 82% from the previous quarter, and 89% lower year-on-year.

Total income including allocations dropped 41% from Q2 to €64m - a 55% fall from the Q3 2010.

In its interim report, the group said: "Income for the quarter was heavily impacted by a reversal of fee income attributable to part of the traditional portfolio.

"The turbulent financial markets during the third quarter reduced the financial buffers, temporarily constraining Life & Pensions' ability to collect fees in Denmark."

Danish financial regulation prohibits fees passing to shareholders when reserves are below a certain level.

Financial buffers in the traditional portfolio at the Nordea division fell by €800m during the third quarter to end at €1.1bn.

The division had accrued €48m in fee income to a fee reservation account, the Nordic and Baltic banking group said, and the final decision on whether these fees could be passed to shareholders would be made at the full-year stage.

Gross written premiums fell by 28% from the previous quarter to €1.2bn, but were up 1% year-on-year.

Nordea blamed "seasonal effects" and the "impact on sales from the financial turmoil".

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