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Danish pension fund to invest heavily in shipping

Danish pension fund Danica emerges as a full scale shipping investor. The annouced investment in Unifeeder only represents what seems to become a several hundred million dollars commtment in maritime businesses.

The announcement that Danica Pension has made a direct investment for USD 73.1 million in Unifeeder merely represents the first in a series of coming investments from the Danish pension company.

Danica Pension CFO Jacob Aarup-Andersen tells ShippingWatch that the company is in contact and negotiating with several specific players in Danish shipping and the maritime sector, deals he expects will be settled, if not this year then next year.

Danica Pension declines to put a specific figure on the total scope of its investment in the Danish maritime cluster, stating only that the total investment sum for all business sectors involves more than a billion USD in the years to come, of which the Danish maritime companies constitute an important part.

"We're investing in shipping and the maritime sector because Denmark occupies a unique position in this field globally. Till now we've only been present with indirect investments in shipping through fund management, for instance in Maersk. This marks the first time that we're investing directly in the companies, which means we'll get much greater insight, but also influence in the companies," Jacob Aarup-Andersen tells ShippingWatch.

Happy to invest more

Danica will be minority shareholder in Unifeeder with a stake that is "above five percent and less than 50 percent." The parties decline to comment on how much.

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"We'd be happy to make further investments in this sector. Our first priority is customer returns, but if we're looking at well-run companies with solid histories and long-term plans in place, we're interested. We've worked very closely with Unifeeder and been deeply involved in the carrier before investing. And we're very convinced that this is a skilfully managed carrier," says the CFO.

Unlike the new hedge funds that have entered the market in recent years, Danica's commitment in the investments will be more long term, and perhaps permanent, says Jacob Aarup-Andersen. As such, Danica is in some sense helping to close the financing gap that many parties in the shipping industry believe was created when banks and investors in a big way pulled out and left the funds with the job of finding equity capital.

Crisis not an obstacle

"We have a large fortune and we know exactly when we have to make our future payments, so we can go in on the long term and help influence the company. What we're doing now represents the beginning of much more," he says.

What about the carriers that are struggling right now and sailing with deficits. Can they come knocking on your door?

"Yes they can. The crucial thing is that they have a skilled management that has an idea of what it takes," says Jacob Aarup-Andersen.

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He says that the pension company focuses on Danish shipping due to the fact that the industry has a close proximity, where the company has networks and relations, though this does not necessarily mean that Danica will refrain from investing abroad.

"I hope for and believe in further investments within a year. Right now we've got many balls in the air, but I think we're going to land some of them, if not this year then in 2015."

No need for capital

Nordic Capital emphasizes that the sale of a stake in Unifeeder does not mean that the carrier has a need for capital in light of specific investment plans.

"This transaction represents some further potential benefits down the road. In relation to a potential IPO, we believe it would be beneficial to count a reputable pension fund such as Danica Pension among our owners."

Nordic Capital has owned Unifeeder for approximately one year, and the carrier marked the equity fund's first investment in shipping. Kim Gulstad does not deny that it will be the last.

"Nordic Capital is looking for interesting investment opportunities in various sectors, and shipping could certainly be interesting," Kim Gulstad, Principal at NC Advisory which serves as consultant to the Nordic Capital funds, tells ShippingWatch.

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