DENMARK - Key players in Denmark's pensions industry have begun talks with the government to set up a DKK5bn (€670m) venture capital fund.

The Danish Ministry of Economic and Business Affairs said the meeting yesterday was to "set in motion" discussions with the pensions institutions about new venture capital.

Economics minister Brian Mikkelsen met with representatives from industry body Forsikring og Pension (F&P), the supplementary labour-market pension scheme ATP and state fund LD.

Lars Rohde, chief executive of ATP, told IPE: "The purpose was to find out if there's a will and a way to make it more likely that small and medium-sized companies can get access to capital."

Prime minister Lars Løkke Rasmussen announced the proposal earlier this month at the launch of an initiative to bolster the domestic economy and secure long-lasting welfare in weak economic times.

Small and medium-sized businesses make up a large part of the Danish economy and have been hard hit by the current economic downturn, Rohde pointed out, adding that it was therefore important to find some way to help them.

All parties at the meeting acknowledged it was necessary to do something, he said.

"The parties agreed to form a working party with the goal of defining the more practical aspects," he said.

"To do this is not that easy because we and other companies have fiduciary responsibilities to our members."

Concerns from the pensions industry have been voiced through the Danish media that such a fund would either be unprofitable for the pension funds or that the capital would be too expensive for the targeted business to access.

But at the meeting, the government agreed to step in with the finance required, Rohde said.

"The government made a promise that it would support these mechanisms one way or the other," he said.

"Of course, this makes it more likely that we will come up with something."

Peter Damgaard Jensen, president of F&P, predicted the proposal to set up the fund would come to fruition, particularly since state funds would be involved.

"It looks quite promising," he said.

Given that pensions assets in Denmark total around DKK2.5trn, Rohde said the figure of DKK5bn mentioned by the prime minister was not the real challenge, but rather how to set up a practical framework to make the capital available.

The result may not be a fund in the traditional sense, he said.

Whatever the final form of the fund, in principle, most of Denmark's pension funds will be involved, he said.

Damgaard Jensen said the final form might use some of the set-ups pension funds currently use, but that there would probably also be other features and instruments as well.

Rohde said an agreement between the parties was likely to come within the next month.
 

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