Leading Dutch Pensions Will Create PE Colossus

ABP, the Dutch civil servants’ pension fund, and PGGM, the Netherlands’ health and welfare workers’ pension fund, in late December announced plans to acquire De Nationale Investeringsbank (NIB), the Dutch state-controlled investment bank in a DFl 4.1 billion (euro 1.9 billion) bid. The two pension funds, which already own 4% of NIB, are expected to reach agreement with the State of the Netherlands to acquire the state’s 35% holding in NIB and to launch a formal tender offer in March for the outstanding share capital in March. The Dutch state will retain its preference share holding, which carries 15% of voting rights in NIB, for the next five years.

If the offer is successful, the pension funds intend to set up a 50/50 joint holding company for their interests in NIB. The private equity, structured finance and mortgage and loan portfolios of ABP, PGGM and NIB will then be merged under the holding company umbrella.

The resultant private equity business will be a force to be reckoned with at an international level. ABP is the second largest pension fund in the world, with assets of more than DFl 270 billion, while PGGM, the Netherlands’ second largest retirement fund, manages total assets of more than DFl 79 billion. ABP plans to take its private equity allocation from its current level of around DFl 2 billion to DFl 6 billion in the next three years. PGGM, which has already made international private equity fund investments totalling some DFl 4.3 billion, plans to allocate a further DFl 2.5 billion to the asset class over the next two years. NIB’s private equity arm, Parnib, has private equity portfolio, composed largely of direct European investments, valued at DFl 1.3 billion. Around 75% of NIB’s portfolio is invested in the Netherlands.

As well as creating an entity with formidable financial firepower, the merged private equity operation will combine a broad base of fund and direct investment expertise and contacts.

Details of the private equity operation’s future investment strategy and management structure are not yet available.