PKA, one of Denmark’s largest pension funds, is separating its private funds business from its direct infrastructure investment unit by establishing two independent entities.
Until now, PKA AIP served as the pension fund’s alternative investment arm, responsible for investing in private equity and infrastructure funds as well as investing directly in infrastructure.
Under the new structure, PKA AIP Private Funds, wholly owned by PKA, will continue focusing on investments in private equity and infrastructure funds, as well as co-investments. AIP Infrastructure, in which PKA holds a 50 percent stake, will be solely responsible for direct investments in the asset class. The remaining 50 percent of the entity is owned by PKA’s ‘partners’, which a spokesman for the pension declined to name.
Each entity will operate under its own distinct management, with Anette Eberhard, current chief executive of Danish export credit agency EKF, appointed managing partner of PKA AIP Private Funds. Kasper Hansen will serve as head of the direct infrastructure investment business, a role he’s held since 2016, when he first joined the organisation. The two executives will report to PKA chief executive Peter Damgaard Jensen and chief investment officer Michael Nellemann Pedersen, the spokesman told Infrastructure Investor.
The establishment of the two companies will provide other institutional investors the opportunity to partner with PKA in creating their own portfolios, the pension fund said in a statement.
According to the spokesman, this was not an option before, but it is something that had been planned since PKA AIP was launched in 2012. It was “only a matter of when it was the right time to open [up] for other investors,” he said. “AIP will be able to get a bigger volume of capital for the investments and make [them] at a lower cost,” the spokesman added.
Since its launch in 2012, PKA AIP has invested nearly DKr40 billion ($6.6 billion; €5.4 billion), 50 percent of which has been in infrastructure, either via funds or direct investments, and has achieved an annual return of up to 18 percent. According to its website, PKA AIP has invested in several vehicles, including a $150 million commitment to I Squared Capital’s second fund and an equal amount committed to AP Moller Capital’s first Africa Infrastructure Fund.
While AIP Infrastructure will continue to focus on direct investments in energy production, storage and distribution as well as water, transport and telecoms, most of its current portfolio – six out of eight assets – is concentrated in offshore wind. Last November, it acquired a 25 percent stake in the Walney Extension offshore wind farm in the UK for DKr3 billion. The other two investments are in a biomass plant and a gas processing facility.
AIP Infrastructure is in the process of building out its investment team of approximately 20 professionals and plans to invest at least DKr10 billion directly in the next three years.