PensionDanmark invests in infrastructure to boost returns

COPENHAGEN, Oct 11 (Reuters) - PensionDanmark became thelatest manager of retirement funds to branch out in the hunt forhigher returns, saying it would invest 1.6 billion euros inenergy infrastructure in Europe and the United States.

The Danish pensions group would establish a new fund,Copenhagen Infrastructure Partners, and initially commit 800million euro for investments in energy-related assets other thanwind energy over the next three to four years.

"In response to the very low bond yields and uncertaineconomic outlook, PensionDanmark is increasing its investmentsin various types of infrastructure," said Torben Moger, managingdirector of PensionDanmark.

The group, which has 618,000 members and 125 billion Danishcrowns ($21.62 billion) in assets under management, has alreadyinvested in wind energy projects, including with Germany's E.ON

and Danish state-owned oil and gas group DONG Energy.

The first 800 million euros investments in the fund wouldinclude electricity transmission, water supply and biomass-basedpower generation and would be focused on Europe and the UnitedStates, the group said.

PensionDanmark would then invest another 800 million eurositself over the next four to five years in projects which couldalso include wind energy, and which could be outside Europe andthe United States.

The second round of investments would take PensionDanmark's

investments in infrastructure to about 10 percent of totalassets from currently just over 4 percent.

"Over the coming years, we aim to increase our exposure toinfrastructure significantly," Moger said.

Pension funds have increasingly been seen hunting for higherreturns through buying direct equity stakes in wind powerprojects that are being shunned as too risky by banks and otherinvestors.

It is a major change for the funds, which favouredgovernment bonds for years until the debt crisis gripping Europeturned this once low-risk strategy on its head and drove downinterest rates elsewhere, leaving few alternatives.

Japan's Government Pension Investment Fund, the world'sbiggest public pension fund, said last week it was consideringwhether to diversify further into alternative assets includinginfrastructure funds.� Copenhagen Infrastructure Partners expect to raise a secondfund in three to four years time, which would be open to otherinvestors, PensionDanmark said.($1 = 5.7817 Danish crowns)

(Reporting by Mette Fraende; Editing by Toby Chopra)

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Keywords: DENMARK ENERGY/PENSION