NETHERLANDS - The €103bn asset manager for the Dutch healthcare and social work sector, PGGM, is to expand its infrastructure portfolio in Europe as well as in emerging markets, specifically targeting Public Private Partnership (PPP) projects due to their low risk profile.
PGGM announced yesterday it has entered into a new joint venture with international construction company Royal BAM Group to invest in PPP projects in Europe.
The 50/50 partnership, which will focus on the development of social and transport PPP projects in the Netherlands, Belgium, the UK, Ireland, Germany and Switzerland, will initially seek to invest €390m.
PGGM spokesman David Uitdenbogaard told IPE that the pension fund will continue to expand its infrastructure portfolio in Europe and will therefore sign several other agreements with local companies over the next months.
"Infrastructure matches PGGM's liabilities perfectly as it offers a stable long-term cash flow as well as inflation-linked returns.
"The nature of PPP projects, which are based on a long-term concession agreements with governments, also offer a low risk profile", Uitdenbogaard said.
However, Europe is not the only interesting market for PGGM. The asset manager is also looking to diversify its portfolio by investing in emerging markets such as India, China and Latin America where the needs for infrastructure have been growing exponentially over the last years.
India itself plans to invest up to US$1.5trn (€1trn) over 10 years to improve its infrastructure network, which is thought to be stunting its economic growth.
Moving to Latin America, several countries offer a wide pipeline of opportunities. Among them, Brazil is currently looking to secure investments from foreign investors to build several infrastructure projects, as the country will hold the football World Cup in 2014 and the Olympic games in 2016.
Uitdenbogaard said: "PGGM is seeing good opportunities in those markets and will invest there through funds or with strategic partners."
The joint venture with Royal BAM follows a previous agreement signed between PGGM and Lend Lease, which saw it commit £220m (€262m) in capital to become the principal investor in the new infrastructure fund raised by the company. The facility aims to invest in healthcare, education and accommodation projects in the UK.
In addition, the Dutch asset manager with roots in the healthcare sector also acquired a 25% share in an offshore wind farm in the Irish Sea for £16m (€19m).