Danish Pension Firms Launch Africa Fund | Chief Investment Officer

A.P. Moller Holding, along with Danish pension firms PensionDanmark, PKA, and Lægernes Pension, have collaborated to launch Africa Infrastructure Fund I, which will focus on infrastructure investments in Africa.

The four companies have committed $550 million to the fund, which will have an emphasis on transportation and energy investments on the continent. The companies said the fund will facilitate investments to support sustainable economic growth and prosperity in Africa, while at the same time aiming to deliver attractive returns to its investors.

The fund will be open for Danish as well as international investors for the next 12 months. It has a targeted lifetime of 10 years, and has an initial target of 10 to 15 investments in total. Following the initial commitments, the fund will be open to additional institutional investors in the next 12 months. The fund’s goal is to have a total capital commitment of $1 billion.

“We see this as a unique opportunity to invest in a region with high economic growth and attractive investment opportunities alongside a partner–A. P. Moller Capital–that has extensive investment experience combined with a strong network and a promising pipeline of potential investment projects,” said Torben Möger Pedersen, CEO of PensionDanmark.

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“The fund is a good example of how we as investors can combine attractive investments for our members and at the same time contribute to the fulfillment of the UN sustainable development goals by mobilizing private capital on a large scale.”

PensionDanmark is already invested in Africa in farmland, sustainable farming projects, and a number of renewable energy infrastructure projects such as the Lake Turkana Wind project in Kenya.

The fund will be managed by A.P. Moller Capital, a subsidiary of A.P. Moller Holding. A.P. Moller Capital consists of a team led by Kim Fejfer, Lars Reno Jakobsen, Jens Thomassen, and Joe Nicklaus Nielsen.

“Together we will build and operate infrastructure in Africa that supports sustainable development and improves living standards across the continent,” said Fejfer, managing partner and CEO of A.P. Moller Capital. “We want to combine the best from industry in terms of project management and operating competences with the best of private equity in terms of focus and flexibility.”

Tags: A.P. Moller Holding, Africa, Infrastructure, Pension, PensionDanmark

Pennsylvania Auditor General Eugene DePasquale has criticized the $27.5 billion State Employees’ Retirement System (SERS) for not doing enough to cut the amount it spends on investment fees.

“Every dime going to Wall Street managers is not going into the pension funds that desperately need it, and adds additional stress to Pennsylvania’s budget situation,” said DePasquale in his performance audit of SERS.

The auditor said that while SERS hired investment consultants in accordance with its written procedures, it did not adequately pursue competitive offers and failed to document fee negotiations. He also said the state wasn’t getting its money’s worth, and pointed out that the system’s investment returns of 6.5% in 2016 was below its expected return of 7.25%, and well below the national median return of 12.4%.

He did say that “SERS is moving in the right direction by starting to address many of the issues I’ve been pushing for in the past four years, including reducing investment fees and using more passive investments, however, there is still room for improvement.”

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According to DePasquale, SERS has reduced investment manager expenses from $345 million in 2007, to $167 million in 2016; and since October 2016, has moved $3.9 billion of assets into passive investment strategies, which reduced annual external investment management fees by approximately $17 million. As of April 26, SERS’ investments are 54% active and 46% passive.

“I commend SERS for achieving considerable cost savings so far,” DePasquale said. “Nonetheless, my audit found that SERS can still save more by taking every opportunity to negotiate lower fees and by competitively bidding every contract, every time.”

The 119-page audit report, which covers from the beginning of 2013 to March 31, 2017, includes 18 findings on six issues and makes 36 recommendations—23 directed at SERS, 13 directed at the General Assembly.

In the audit, DePasquale also said the Public Employee Pension Forfeiture Act needs to be broadened.

“The language of the Public Employee Pension Forfeiture Act is outrageously restrictive and creates loopholes where workers can be convicted of a sex crime and still keep their pensions,” he said.

According to DePasquale, SERS was overfunded by 32% in 2000, and remained over 100% through 2004. He said legislative changes in 2001 to increase benefits and to allow underfunding of employer contributions, combined with economic downturns, reduced the funding level to 58.7%, with a projected unfunded liability of $19.5 billion in 2017.

Tags: audit, Pennsylvania, Pennsylvania Public School Employees Retirement System (PSERS), Pension