DENMARK - The huge Danish PFA corporate pension fund has boosted its infrastructure investment and plans to move even further into the asset class next year, probably including direct investments in the sector for the first time.
PFA's CIO Henrik Franck told IPE the DKK 213bn (€28.6bn) pension fund has now committed approximately 1.5% of assets under management to infrastructure funds - well above the fund's 0.3% strategic asset allocation to the asset class.
"We will most likely increase this commitment during 2008, but we wish to monitor the performance of existing commitments before determining a more precise target for final allocation," said Franck.
PFA's first commitment to infrastructure was put in place in the summer of 2006 and, at the moment, is only geared to invest via infrastructure funds.
"But we foresee we will be able to include direct investments in infrastructure deals in some years' time if the market develops as anticipated," Franck said.
"If we decide to do direct investments, we shall most likely prioritise Northern European infrastructure project in the starting period of this effort," he said.
Franck believes the investment community faces a massive supply of infrastructure investment opportunities over the next few years globally, and says PFA wants to be able to use this development to invest a substantial part of its assets.
"We believe that most infrastructure investments offer an attractive return profile for liability driven investment companies like PFA," he said. "We have commitments stretching 50-60 years into the future and very few other investment vehicles than infrastructure investments have this very long duration."
PFA has so far committed to two brown-field infrastructure funds which have global reach as well as two European focused infrastructure funds; one of the latter contains purely green-field investments, he added.
PFA also has indirect exposure to motorways in Italy and Mexico, energy transportation in the US, parking facilities in the US and to port operators in the US and UK among other investments, added Franck.
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