State government fund manager Queensland Investment Corporation (QIC) has entered into a strategic partnership with Danish pension fund PenSam to invest in European private equity.
The partnership is to be initially funded by a DKK2.2 billion ($500 million) three-year mandate from PenSam. The funding will be committed to funds and invested directly in co-investments.
According to QIC, the strategic partnership will focus on the lower middle-market buyouts space with co-investments to be made alongside established and emerging deal sponsors.
Private equity partner and head of Europe for QIC Rune Jepsen said cyclical and structural developments in the European private equity provided opportune timing for the partnership.
“As a long-term investor in the lower mid-market, QIC has seen a shifting landscape where traditional peer investors have migrated out of this part of the market for various reasons,” Jepsen said.
“This has had a particularly pronounced effect on capital availability for emerging mid-market private equity managers, where QIC remains active on the back of a strong track record supporting new sponsors through both fund commitments and co-investments.
“This structural shift in capital availability for lower mid-market buyouts has recently been coupled with a cyclical decline in capital availability for private equity in general.
“In this context, both QIC and PenSam see a compelling opportunity in the current market and view this as an opportune moment to launch what is expected to be a long-term strategic partnership.”
In line with QIC core strategy, the mandate will target control investments in high-growth companies, typically with enterprise values of between €100 million ($168 million) and €1 billion.
PenSam head of private capital and real assets Jeppe Starup said the decision to partner with QIC had been premised on finding a like-minded organisation with a compelling track record in the field.
“Like PenSam, QIC is bound by the single objective of delivering investment outcomes for its clients,” he said. “It is of great importance to us to work with someone who shares our philosophy and where we enter as equal partners in a close collaboration with a common goal. This includes a strong focus on the consideration of ESG factors and long-term value creation.
“QIC has operated in the European market for over 15 years, investing into smaller unlisted companies and has proven its ability to deliver srong returns in a consistent and sustainable manner.”
QIC chief executive Kylie Rampa said the partnership would enable the manager to expand its European investment team.
“QIC has been represented locally in Europe since 2006 with teams in both Copenhagen and London working with and for our international clients to deliver positive outcomes,” she said.
Rampa said the manager looked forward to further growth in its international presence, in alignment with client demand.
Copenhagen-based PenSam, one of Denmark’s largest pension funds, is a fund for workers in aged care, childcare and cleaning services. The fund had around DKK182 billion in assets under management at the end of 2022.
QIC had $102.2 billion in assets under management at the end of June.
Image: Jeppe Starup of PenSam with QIC’s head of Europe Rune Jepsen.