Dutch pension giants APG, PGGM set conditions for participation in €300bn EU investment plan

The schemes say long-term investments should be guaranteed and rewarded fiscally.

Dutch pension investment giants APG and PGGM say they are open to participating in the European Commission’s “Investment Plan for Europe,” but only if certain conditions are met, including more disclosure about small and midsize enterprises (SMEs) as well as guarantees and other possible incentives such as tax breaks for long-term investing.
The plan was unveiled last December by European Commission President Jean-Claude Juncker. Its purpose is to mobilise €300bn for investments in SMEs – especially those who are not getting bank loans – and infrastructure in a bid to boost the EU economy.
In a new paper entitled “We need to talk,” APG and PGGM said that while they understand why EU leaders want them to participate in the plan, they said: “we have not been created to fill the gaps in government budgets.” Instead, “our mandate is to invest pension savings in the best interest of our clients,” they added.
On the other hand, APG and PGGM noted that they already had more than 50% of their assets – €424bn and €200bn respectively – invested in Europe and would be willing to allocate more if certain conditions were met.Starting with SMEs, the Dutch schemes said the securitisation of loans to the sector could spur more institutional investment. This, however, depended on investors getting the same information that the banks have about the quality of the underlying loans. The funds said: “We could discuss a standard definition framework which would be an important tool for investors to compare securitisation proposals.”
Investments in infrastructure could be buoyed if, say, performance data on infrastructure loans and on non-listed real investments were shared more between investors, the schemes said.
The Commission and EU leaders should also consider strengthening investor rights if they wanted participation from investors like APG and PGGM. This could mean guaranteeing the terms of long-term investments or providing tax breaks to those who do them: “Investors can only play their role adequately if the Commission and the Member States provide certainty that investments made under the plan will not be changed by the relevant authorities during their life-cycle.” said the schemes, adding that in the past, “governments have not always been the most reliable business partners.”

Link to paper

Link to RI story: EU looks set to support promotion of ESG within Capital Markets Union plan