Dutch pension fund PGGM continues to pursue direct investments through innovative partnerships with developers. Its latest effort: a joint venture with Dutch developer BAM PPP to target public-private partnerships (PPP) across Europe, both partners announced today.
The joint venture, known by the rather lengthy moniker of BAM PPP PGGM Infrastructure Cooperatie, will invest €390 million in social and transport PPP projects across the Netherlands, Belgium, the UK, Ireland, Germany and Switzerland. BAM PPP will transfer €150 million worth of assets into the partnership, with the remaining €240 million to be used for the purchase of new assets.
Under the terms of the partnership, PGGM will supply the majority of capital required for existing projects with new projects to be funded on a 50/50 basis. BAM, for its part, will be responsible for bidding for new projects and will provide asset management services to all the assets owned by the joint venture. Both partners will have equal representation on the board of the joint venture.
Henk Huizing, head of infrastructure at PGGM, said the “joint venture with BAM perfectly fits into our strategy of co-operating with strong strategic partners and investing directly in infrastructure projects. Furthermore, the inflation-linked returns together with the stable long-term cash flows of these PPP projects meet our clients’ interests,” Huizing explained.
For BAM, the joint venture gives the developer access “to a new source of long-term capital,” highlighted Nico de Vries, BAM’s chairman. “It also facilitates our strategy of structured divestment and recycling of equity in operational projects whilst permitting BAM to continue as a long-term partner to the projects,” de Vries added.
Last December, PGGM launched a UK-focused social infrastructure fund with Australian developer Lend Lease. The vehicle, known as the Lend Lease UK Infrastructure Fund, launched with more than £220 million (€250 million; $356 million) in capital from PGGM and Lend Lease, which has a 10 percent co-investment in the fund.
The 28-year fund presents several similarities with the PGGM/BAM joint venture, in that it launched with a number of UK assets already owned by developer Lend Lease. The fund also plans to acquire assets already owned or being developed by Lend Lease over its five-year investment period, similar to the investment strategy of the PGGM/BAM partnership.
PGGM manages pensions in the Dutch welfare sector. It currently manages around €105 billion of pension assets on behalf of more than 2.3 million participants.