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Danish pension fund CIO: why I prefer illiquid infrastructure

Danish pension fund CIO: why I prefer illiquid infrastructure

We have interviewed several investors asking them about the biggest issues they are facing at the moment. Here's what Danish Pension Fund for Engineers' Søren Kolbye Sørensen told us.

Name: Søren Kolbye Sørensen
Firm: Danish Pension Fund for Engineers
Country: Denmark

We have been looking at infrastructure for a number of years but haven’t found many good entries into the asset class. Our investments in infrastructure are pretty recent and small, but we have plans to allocate quite a lot of capital to two large infrastructure products.

Infrastructure is now in fashion: there’s a lot of competition, especially for small projects, and it’s therefore better to look for larger opportunities. We’ve been looking at illiquid infrastructure; we don’t see a lot of value in liquid infrastructure as it has too much beta exposure.

We access the asset class indirectly through funds because we don’t have the expertise to go into it directly. In this field, size matters. If you want the really interesting infrastructure projects, you have to have a certain size and be able to get exclusivity on deals.

We have been cooperating with other asset owners in the Danish market to invest in infrastructure. By doing this, we have increased scale and reduced costs. All this took time as you have to have trust in the individual parties you work with.

Generally speaking, I think it’s worthwhile to establish these kinds of collaborations as they enable you to gain access to a different and more interesting segment of the market.

In terms of sectors, we like alternative energy even though you need to be careful with possible subsidy policy changes. For this reason, we invest only in Nordic European countries and the US as the political and economic landscapes are quite solid and predictable.

We also look for managers with experience in the market who are willing to maintain the assets for a long time.

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