Denmark’s Nykredit seeks $314m for infra FoFs strategy

The new vehicle is targeted at Danish investors just below the ranks of the country’s large pension schemes and is backed by Sampension as liquidity provider.

Danish asset manager Nykredit has launched a new infrastructure fund of funds strategy with a target of DKr2 billion ($314.1 million; €268.3 million).

Nykredit Infrastructure Fund 1 is designed to give some of Denmark’s small- to medium-sized investors exposure to an asset class they’ve traditionally found difficult to access, Peter Kjaergaard, chief investment officer at Nykredit Asset Management, told Infrastructure Investor.

The fund is expected to reach its target by the middle of next year and is aiming for returns of about 8 percent net. While the fund is in a Luxembourg structure and so is open to international investors, Nykredit will initially be targeting those from its domestic market.

“Some of the investors are sophisticated and know about the asset class, but they find it difficult to get exposure to it,” said Kjaergaard. “We’re trying to address the segment in the market just below the large pension funds.

“Some funds have higher fees and this is something we are very mindful of. We make sure the fees charged are in a good proportion to the risk taken. By pooling investors, we can go higher up the fee spectrum.”

Nykredit has so far garnered DKr500 million for the strategy from 10 investors and has made a commitment to I Squared Capital’s sophomore fund, which is expected to close on $6.5 billion. The vehicle will invest across six to nine funds, with what Kjaergaard described as a “good mix” of greenfield and brownfield. It is largely looking for funds investing in the OECD, although has a limit of up to 40 percent to invest beyond these countries. The fund is backed by pension fund manager Sampension.

“Their role is to act as liquidity provider,” Kjaergaard explained. “The fund has three liquidity windows – one after five years and then every third year thereafter. The investors will have the opportunity to divest and if we cannot find other investors, Sampension will take over the positions if necessary. The investors should not plan on getting out, but they can draw on this.”

Nykredit was an investor in Copenhagen Infrastructure Partners’ second fund, which closed on €2 billion in July 2015, and Kjaergaard sat on the investment committee between September 2014 and May 2015.