Danish pension association members agree on guidelines for valuing unlisted assets

Members of Insurance and Pension Denmark have agreed on new guidelines to use when valuing the price of unlisted assets.

Although the association believes the current rules for valuation are robust, it said they contain elements of estimates because no prices can be observed in the market. Therefore, its members have agreed on a recommendation with common guidelines for transparency regarding the valuation of the unlisted assets.

The association said that such assets make up a “significant and stable” part of pension companies’ holdings – in recent years accounting for one fifth of a pension company’s portfolio.

It said that unlisted shares are typically more stable than listed shares, while at the same time providing a greater return compared to traditional investment bonds.

“It is in the interest of pension customers that part of their savings are invested in unlisted assets. And, it is also in the interest of the climate and society, because green investments in e.g. wind farms are typically in that category,” Insurance and Pension Denmark CEO, Kent Damsgaard, said.

He said the industry collectively is “very concerned with how we can calculate the value in a transparent way”. The guidelines build on the regulatory requirements that already exist. However, the association highlighted that the guidelines do not change the fact that responsibility lies with each pension company for valuing unlisted assets.

“There are many different asset types, risk profiles and investment structures. Unlisted assets range widely – from wind turbine parts, energy supply, road construction, ports/airports, properties and more. With the guidelines here, we create clarity about how companies can handle valuations,” Damgaard added.

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