Dutch Pensions Look to Beef Up In-House Private Equity Staff

Dutch pension giant PGGM made waves this summer when it gave its external private equity managers an ultimatum: disclose all fees or face divestment.

The pension systems still want to invest in private equity – but they want to do it internally.

Several Dutch pension systems this week are asking permission to hire private equity staffers to begin making direct PE investments.

From the Financial Times:

PGGM, the Dutch investment giant, wants to bypass paying fees to expensive and opaque private equity firms by hiring more internal staff so that it can take stakes in companies directly.

Ruulke Bagijn, chief investment officer for private markets at the Dutch asset manager, told FTfm she would also request permission from PFZW and the other five pension funds she works for to hire more private equity staff and start making direct private equity investments.

PGGM’s existing private equity team has 18 employees focusing on external manager selection and co-investment opportunities.

She said: “Pension funds can build core private equity expertise directly in-house. This is really something pension funds should do if they are serious [about achieving better returns].

“I think [having this in-house expertise] would be fantastic and would enable us to make further steps towards reducing costs. PGGM has the scale and can attract talent.”

[…]

PGGM began building its internal infrastructure and private real estate teams in 2009 to reduce its reliance on external managers and gain more control over the types of investments made in those areas. The plan is to develop a similar level of expertise in private equity, which represents roughly 5 per cent of PGGM’s total assets.

PGGM manages $208 billion in assets.