PKA, the €15bn Danish pensions giant, plots microfinance move

Fund also battles Danish press allegations about investment holdings.

Pensionskassernes Administration (PKA), the DKK111bn (€14.9bn) Danish pension fund manager, is planning a move into microfinance, according to Peter Damgaard Jensen, its chief executive.
Speaking on a panel at a conference in London organised by Hermes, the UK fund manager, Damgaard Jensen said the giant Danish fund was likely to invest via a private-equity type exposure to microfinance, in order to avoid what he said were relatively high costs in “reaching the end customer”. He said PKA had already made investments in solar energy, cleantech, wind power and recycling, partly in response to pressure from its fund members.
PKA will join a growing number of large European pension funds that have made allocations to microfinance, including PGGM, the €75bn Dutch pension fund asset manager, which has committed €200m to the asset class.Separately, PKA, which administers the assets of eight occupational schemes, has faced criticism in the Danish press for investing in companies blacklisted by DanWatch, a Danish financial watchdog. DanWatch singled out PKA investments in companies including L3 Communications in the US, Bridgestone, the tyre company, Safran, the French defence company, and Dong Feng, the Chinese car manufacturer. DanWatch said the companies had all been blacklisted by three other Nordic pension funds.PKA told IPE.com that it had investigated L3’s involvement in the production of parts for cluster munitions but decided against any action. Safran, it said, had been placed on watch over its relation to arms manufacturers. It said Dong Feng, which DanWatch alleges has supplied military equipment to the Burmese junta, has also been put on the observation list and PKA said it would engage with the company, but sell the shares if unsuccessful. PKA said allegations levelled against Bridgestone of using child labour in Liberia would be investigated.