DENMARK – Three of Denmark's biggest pension funds have joined forces to create a "one-stop shop" to help public authorities plan, build and finance construction projects, in a bid to invest as much as DKK5bn (€670m) in infrastructure and real estate via public-private partnerships (PPPs).
PKA, PensionDanmark and Sampension have signed an agreement with property administrator DEAS and Nordic contractor MT Højgaard to cooperate on future construction-related projects within PPPs, said PKA.
PKA's managing director Peter Damgaard Jensen said: "There is an unmet and growing societal need for this type of PPP project."
The funds expect an increased supply of construction-related PPP projects from local, regional and central government, and have come up with the new idea as a way of overcoming the obstacles that stop such partnerships from happening.
The agreement allows for investment of as much as DKK5bn in building PPP projects over the next few years.
Each project will be worth at least DKK50m, which means the investment framework could finance 50-100 new public projects, PensionDanmark said.
Torben Möger Pedersen, managing director of PensionDanmark, said: "We are in a position to enter into partnerships that will ensure the public sector gets better and cheaper solutions, we get a reasonable return and many new jobs will be created once the building work gets underway."
The cooperation between the three funds and two companies was the first in Denmark to combine financial power with building and facility management skills, he said.
He said it would provide a "one-stop shop" for public authorities with construction needs, giving them a single access point for services – from architectural to financing.
Möger Pedersen said the funds would now take the initiative and approach public authorities that had potential projects, rather than waiting for them to make the first move.
"The new joint venture clears the way for the PPP breakthrough people have been talking about for years," he said.
He said traditional public infrastructure projects were notorious for going over budget and taking longer than planned.
And when buildings and facilities are built in that way, he said they tended to deteriorate because maintenance was given little priority.
"You avoid these problems by using the PPP model," said Möger Pedersen. "The parties have an incentive to finish on time and at the agreed cost and also think in terms of long-term solutions that last."
The funds said MT Højgaard had been at the vanguard of the Danish PPP market since 2005, having won five of the 13 partnerships offered in the country.
So far, the partnerships had produced three schools in Vildbjerg, Rudkøbing and Frederikshavn, as well as the registration court in Hobro and a car park at the Randers county hospital.
Torben Biilmann, managing director of MT Højgaard, said local and regional councils had woken up to the advantages of PPPs, which offered high-quality products and control of costs for many years into the future.
The three Danish pensions funds manage combined assets of around DKK500bn.