PFA ups exposure to local enterprise
Danish pension fund PFA said it is increasing its exposure to small and medium-sized enterprises (SMEs) in Denmark by raising its stake in Kirk & Thoresen Invest.
PFA — the country’s largest commercial pensions provider — said it decided to boost its ownership stake in the private equity firm to 30% from 16%.
A PFA spokesman declined to say how much the investment would cost.
Henrik Heideby, managing director of the £417bn pensions company, said: “For a long time we have wanted to support small and medium-sized businesses more and therefore the thousands of Danish jobs that are a part of Danish economic life.”
Heideby already sits on the board of Kirk & Thoresen Invest, which has holdings in library supplier Biblioeksmedier, air purifier, Lesni, and supplier of native and exotic meats, Dencon, amongst others.
Apart from increasing its stake in the firm, PFA said it was also making a loan facility available to Kirk & Thoresen.
“We don’t have the set up internally in PFA to screen the market to see which of these smaller companies have the necessary potential,” Heideby said.
“Apart from that, these types of investment often require you as the investor to give concrete leadership and economic advice to the businesses concerned,” he said.
PFA did not have the set up to act as a business doctor, he said.
Heideby said the pension company’s desire to support SMEs was not driven by idealism.
“We are not philanthropists, we will invest in companies we believe will give a good return,” he said.
Heideby said PFA would like to make more investments of this type.
“With this model I believe we, as a very big institutional investor, will also have the opportunity to work on projects that are so small that we would normally not get involved in them,” he said.
PFA said it also had investments in Erhvervsinvest and SE Blue Equity, which invested in SMEs in Denmark.
The Danish government has made moves to encourage the country’s pension funds to lend to SMEs since bank lending has become harder for the companies to come by as a knock-on effect of the financial crisis.
At the end of last year, it extracted a pledge from the pensions industry to to promote pension fund lending to SMEs as well as working to bolster their access to capital resources.
This was part of larger deal to ease the pressure on the level of reserves pension funds needed by extending a previously altered discount yield curve.