DENMARK - Labour-market pensions administrator PKA plans to expand its investment in infrastructure by DKK3bn-4bn (€400m-540m) over the next few years, saying the asset class will help it continue to produce stable returns.

Overall investments at PKA, which runs five healthcare sector pension funds in Denmark, returned 7.6% in the first six months of this year, the institution reported.

Peter Damgaard Jensen, chief executive, said: "In order to continue achieving stable returns for our members, we will invest more in infrastructure in particular, which provides continuous stable returns."

Infrastructure is therefore becoming a significant part of PKA's investments, he said.

PKA said it has pledged to invest around DKK6bn in infrastructure, mainly abroad.

This amount is expected to increase by DKK3bn to DKK4bn in a few years, the institution said.

PKA said its first-half return had been particularly affected by marked falls in interest rates, which it had hedged against.

Apart from this, Danish shares had contributed a return of 16.2% to the overall result, with quoted equities overall producing 6.7%.

Damgaard Jensen said: "When we look at the Southern European markets, which have also made it challenging to be an investor in 2012, we are very pleased we have been able to continue the positive development of recent years and achieve a return of DKK11.5bn."
Even though PKA was economically robust enough to take risks and maintain a high proportion of equities, it would increasingly target those investments less sensitive to market turbulence.

He said there were some exciting projects on the drawing board in foreign energy sectors, reminiscent of PKA's investment in the Anholt offshore wind farm.

"But it is clear we are very interested in investing in Danish infrastructure, for example, in the PPP (public-private partnership) projects, where we already have some experience with investments in municipal health centres," he said.

PKA also said it would keep focusing on emerging markets, where it had already invested nearly DKK14bn.