Denmark’s ATP is making a sizeable unlisted equity and loan investment in the Nordic country’s biggest defence company, Terma, the DKK710bn (€95.2bn) statutory pension fund announced.
ATP said late yesterday it was investing “a single-digit billion sum” in Danish kroner in Terma, in a deal which involved the pension fund taking a stake in the privately-held company and gaining a seat on its board.
Terma, which ATP described as a world leader in the development of radars, for which it said both civil and military demand was now growing significantly, has up to now been 100% owned by the Thomas B. Thriges Foundation.
The pension fund said this was the third single investment made so far by the domestic illiquid assets division it set up in 2021, ATP Langsigtet Dansk Kapital (ATP Long-Term Danish Capital).
Carsten Dilling, Terma’s chair, said both the Danish government and the European Commission has already said there was a need for their areas to do more to bolster their own military defence.
“That is why Terma has launched an ambitious growth strategy, where we will double our turnover over the next three years,” he said.
“Of course this requires capital and solid and long-term owners who will join us on the growth journey, and we are incredibly happy that ATP wants that,” Dilling said.
ATP said that for its part, the Terma investment was part of its aim of secure solid and long-term returns for Danes’ pension savings.
Mikkel Svenstrup, the Hillerød-based pensions institution’s chief investment officer, said: “Terma fits very well with what ATP wants with Long-Term Danish Capital.
“It is an unlisted Danish company with clear global potential – and here, as a long-term investor, we can act as a sparring partner on the forthcoming stretch of its growth journey,” he said.
Svenstrup said ATP saw the Terma investment both as an opportunity to create an attractive return for its members and as a chance to invest in a growth company creating new Danish jobs.
“In addition to being an investment with potential, ATP is making an important contribution with the capital injection at a time characterised by an instability around defence and security,” the CIO said.
Terma’s growth strategy, according to which the company aims to double revenue in three years, involves plans for a number of acquisitions, ATP said.
ATP’s new defence sector investment comes at a time when – in light of Russia’s ongoing war in Ukraine – more private investment in the European defence industry has become crucial. However, the ethical case for investing in arms and related products and services is being debated.
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