553 billion euros. That is APG’s total invested assets worldwide (position as of the end of June 2022). The goal: a good pension in a livable world for the funds’ participants. The portfolio is diversified, of course. From investments in wind farms in Zeeland to Australian listed shares in stores. And from safe bonds to the somewhat more fluctuating trade in gold or soy. Who are the people behind these investments? What drives them? What choices do they make? And why?
In this episode of the series The Investors: Jan-Willem Ruisbroek, head of investment strategy infrastructure at APG.
Ruisbroek has every reason to be a happy man. APG was recently voted Real Assets & Infrastructure Investor of the Year at the IPE Real Estate Awards 2022 in Amsterdam. For the second year in a row. APG is “once again demonstrating strong leadership in the global infrastructure investment strategy,” according to the jury report. According to the jury, while other large infrastructure investors boast of investing in the energy transition, for example, APG looks further and also invests in digital infrastructure. “This award shows that our strategy is considered sound and distinctive. It is a nice compliment for what we do”, says Ruisbroek.
According to the jury’s report, APG looks further ahead than many other large infrastructure investors. Still, there will be a lot of gains to be made in the infrastructure field. In what area is there work for you?
“In the Netherlands, institutional investors, including us, will have to invest more equity in infrastructure. Large investors abroad often invest more than 20 percent of their assets in infrastructure, but this is much less for Dutch investors. The extra money is badly needed. For example, the International Energy Agency estimates that more than 4 trillion dollars, that's 12 zeros, are needed annually to achieve a so-called net-zero society worldwide. That is, total global greenhouse gas emissions are less than or equal to those removed from the atmosphere. That 4 trillion must flow primarily to new infrastructure projects such as power grids and renewable energy sources.”
APG’s infrastructure investment strategy is based on five so-called megatrends. One is geopolitical: for example, take a more assertive stance on China. That country invests enormous amounts in infrastructure projects in developing countries. What if China starts using its enormous financial clout in the Western world as well?
“That is already happening. In recent decades China has also invested a lot in Europe. In recent years this has become less common, because governments want to keep their vital infrastructure in the hands of parties ‘close to home’. In general, local pension funds are happy owners of infrastructure, because of their long-term interests and social involvement.”
You started at ABP/APG immediately after you finished your education and haven’t left since. Didn’t you miss out on some opportunities as a result?
“I graduated at a good time because there was a lot of work for students, just like now. There were a number of parties interested in me but I immediately had a very good connection with the man who would later become my first boss at ABP. He said, ‘I like you and want you, here’s an offer.’ At the time, I was also charmed by everything I saw at ABP, like the size and the impact. We have everything here, pretty much all the investment markets. That’s important when you start working, because you have a lot of choices. I remember saying during my job interview that anyone who is 24 and says they know exactly what they want is bluffing. Because when you are just out of school, you don’t know exactly what you want. Personally, I wanted to work for a really cool employer more than anything and take my time poking around there, finding out what made me the happiest. And that’s how it went.”
You’ve been focusing entirely on infrastructure since 2008. What makes investing in it so interesting to you?
“The type of companies we invest in are interesting to me, above all, because of the essential role they play in society. When people plug something electrical into a wall socket, they often don’t realize the enormous infrastructure behind it. That is, until there is no power for a while. The social importance of companies that provide people with an essential commodity, such as electricity, data or mobility, also greatly appeals to me. Just like the essential role that all these companies play in the major social issues of our time, such as the energy transition and the digitalization of the world. We will only be able to achieve energy transition if the infrastructure for it is in place. What also attracts me is that we invest in private companies. In private companies you are often closer to the company and you can think more actively about the strategy and what you want to achieve with such a company than with listed companies.”
One of the ways to influence private companies is to take a seat on a non-executive board. You do that regularly. How do you wield that influence in practice?
“I am on the supervisory board of two companies that we invest in, which means that I supervise the management. The companies we invest in are often smaller than the listed companies, of which you might buy a small pick of shares. We regularly have a large stake in the private companies we invest in, which gives us the right to appoint a commissioner. In our team we have something like twenty or thirty supervisory directorships. That takes up quite a lot of time. As a supervisory director you are involved in assessing and approving the business plan and the long-term strategy, but you also have to contribute to the deliberations on the management's appointment policy.”