DENMARK – Labour-market pension fund PensionDanmark is investing DKK1.2bn (€161m) in the first offshore wind farm to be built in the US.
The DKK18.5bn pension fund said it was making a conditional investment commitment of $200m in the planned Cape Wind power plant, which will be sited in the Nantucket Sound off the coast of Massachusetts.
Torben Möger Pedersen, PensionDanmark's chief executive, said: "At a time when bond yields are very low, this is expected to be an attractive investment opportunity for us."
Apart from giving pension scheme members a good return, the project will create growth and jobs in Denmark and aid the switch to more climate-friendly forms of energy production, he said.
The money will be invested via the Copenhagen Infrastructure I fund, which is managed by Copenhagen Infrastructure Partners (CIP).
The capital funding for Cape Wind will take the form of a mezzanine loan, PensionDanmark said, adding that the plan was to close the deal to build the wind farm this year.
The US project has been under development for 12 years.
Construction is to start by the end of the year, with the plant to start operating in 2015 and be fully commissioned the year after that.
When it is finished, Cape Wind will have total capacity of 454 MW or 1,500 GW a year, supplying power to as many as 550,000 households, the pension fund said.
It said Cape Wind was crucial as a "lighthouse project", to advance the offshore wind industry in the US.
Möger Pedersen pointed out energy infrastructure investment was not new for PensionDanmark, which had previously made equity investments in two offshore wind farms in Denmark and three onshore wind farms in the US.
It has also provided debt financing for onshore wind parks in Sweden and Belgium, he said.
The wind farm could become one of the world's biggest offshore wind farms, with as many as 130 Siemens turbines of 3.6 MW each, the pension fund said.
Its investment commitment was conditional on a final investment decision being made by the end of the year, it said.
CIP partner Christian Skakkebæk said the project was attractive in terms of the site's physical conditions, as well as its having a range of experienced suppliers.
"Power purchase agreements have been secured covering the production of the first phase for the first 15 years, and the plans include the use of proven and operationally stable technology," he said.
The project is expected to be financed by a combination of capital and debt from banks and institutional investors, with Japan's Bank of Tokyo-Mitsubishi UFJ coordinating the financing.
Meanwhile, Denmark's PFA pension fund is investing DKK740m (€99.2m) in a logistics fund, buying a nearly half of NREP Logistics from Swedish pension fund SPP.
SPP said it is selling its 47.5% stake in the logistics fund after taking the decision last year to cut its indirect property portfolio.
The deal was agreed following a competitive process, it said.
Michael Bruhn, director of PFA Ejendomme (PFA Property), said: "This investment matches our overall strategy of increasing our international indirect property exposure."
NREP Logistics was set up in March 2010 by Nordic Real Estate Partners (NREP) and has a portfolio of around 25 very high-quality logistics assets in Sweden, Denmark and Finland, according to PFA.
That portfolio is now worth SEK3.6bn, and this will rise to SEK4bn when it is fully invested, the Danish pension fund said.
Bruhn said NREP Logistics' assets generated stable, high returns and had growth potential.
SPP was advised by Custor Capital in finding potential buyers.