Four Danish pension funds have clubbed together to invest DKK520m (€69.7m) in a hospital building project in the Danish town of Slagelse, in a public-private partnership (PPP) deal that will provide income for the investors over at least 20 years.

Labour-market pension funds PensionDanmark, Industriens Pension, PKA and Sampension have formed a consortium with contractor MT Højgaard and property administrator DEAS to build, own and run the new building which will form part of Slagelse Hospital in west Zealand.

The contract has been awarded by the Region of Zealand (Region Sjælland), and the deal is still awaiting final official approval.

Torben Möger Pedersen, chief executive of PensionDanmark said: “The Region of Zealand will provide security for the economy of the hospital over a long period.

“In this way our investment will ensure a good, stable return for members over many years,” he said.

Jan Østergaard, director of investments at Industriens Pension, said his pension fund was in favour of investing in projects such as this that benefited Danes directly.

“In a time when yields are on the floor, and there is uncertainty on the financial markets, this type of investment also fits in well with our ambition to expand our alternative investment activity,” he said.

The finished building will be owned by the four pension funds, while MT Højgaard — the design and construction contractor — and DEAS will provide facility management services.

MT Højgaard said that in the call for tenders, the Region of Zealand and Slagelse Hospital had emphasised project finance, the quality of construction and related services as well as the financial strength of the partners selected.

The new three-storey building will have 16,000m2 of space, and comprise a maternity unit on the ground floor, and beds on the first and second floors.

It will provide 140 extra hospital beds, and is expected to be ready for use in January 2018.

The partnership has applied for permission to add a fourth floor to the building, but is still awaiting approval for this.

In March last year, PensionDanmark, PKA and Sampension announced they were investing DKK430m in a PPP deal to build a new psychiatric hospital in the Jutland town of Vejle.

Möger Pedersen said he hoped that this PPP project, together with the one in Vejle and those in other places, would signify a real breakthrough in the PPP model in Denmark.

PensionDanmark, PKA and Sampension have made big efforts to promote PPPs in Denmark as a financing and investment model for public works.

Back in 2012, the three pension funds created a “one-stop shop” to help public authorities plan such projects.