NETHERLANDS - The €105bn pension provider and asset manager PGGM will enter into a joint venture on infrastructure with international construction company Royal BAM Group.
The objective of the 50/50 co-operation is to invest in developing transport projects and public buildings in a Public Private Partnership (PPP), not only in the Netherlands, but also the UK, Ireland, Belgium, Germany and Switzerland.
Henk Huizing, PGGM's head of infrastructure: "The inflation-linked returns, combined with the stable long-term cash flows, meet our clients' interests."
He added that the revenues from the PPP projects were secured through long-term concession agreements with governments and therefore had a modest risk profile.
PGGM and BAM have set the initial target investment at €390m, with BAM transferring €150m of existing PPP assets into the joint venture, and both parties contributing on a 50/50 basis to new projects.
Currently, BAM's subsidiary BAM PPP is involved in school building in the UK, the construction of prisons in Germany and road-building projects in the Netherlands and Germany, according to David Uitdenbogaard, spokesman for PGGM.
Under the agreement, BAM will retain responsibility for bid management for new projects and asset management services. It will also represent the joint venture in transactions.
Equal representation on the joint venture's board has also been agreed.
Nico de Vries, executive chairman at BAM, an Amsterdam-listed construction company with revenues of more than €7.5bn, said: "This innovative partnership will enable us to accelerate our growth in the European PPP market."
Since 2006, PGGM has already invested €1.5bn in infrastructure projects, including the Walney wind farm in the Irish Sea.
According to PGGM's Uitdenbogaard, the asset manager prefers direct investment in infrastructure, "as this offers more grip on the portfolio and makes selecting for ESG criteria easier".
PGGM is the pension provider of the €102bn healthcare pension fund PFZW.