Dutch Pension Manager and Shell Eye Buying Energy Company

Recession fears, trade wars, rate hikes, and a strong dollar weigh down index.

The prominent Dutch pension fund manager PGGM is teaming with oil giant Shell to buy Rotterdam-based energy company Eneco, attracted in particular by its green energy operations.

PGGM and Royal Dutch Shell’s wager for the business has been estimated at $3.4 billion. In December, Eneco’s owners, who are 53 municipalities, said they planned to auction the company off in 2019, taking it private.

“The energy transition offers good opportunities for long-term investments in a more sustainable economy and we think Eneco can play a central role in realizing the consortium’s shared ambitions,” said Frank Roeters van Lennep, PGGM’s chief investment officer of private markets.

Both Shell and PGGM, which manages assets on behalf of the $249 billion healthcare pension PFZW, said they would offer further investments in sustainability and renewable energy for Eneco, specifically in Northwestern Europe.

In addition to opening the doors for a large number of partners and customers, Shell promised to provide access to start-ups and digital and mobile developments for the green energy group. The company is adding wind and solar energy investments to its portfolio, according to IPE.com.

“With an integrated value chain—from energy generation and storage to supply of power, gas, and heat with accompanying energy saving and efficiency services—Eneco has been a driving force for the Dutch energy transition,” the two acquirers said in a joint letter to shareholders. “We realize that the strength of the Eneco brand has been built by customer-focused people and is nourished by a dynamic and innovative culture.”

One of the pension manager’s top priorities is sustainable investing. It currently has a $7.9 billion stake in climate-related investments, with a $22.7 billion target by 2020 and ambitions to expand into other areas such as food and clean water security. The firm said Eneco could help cut PGGM’s carbon footprint.

“As companies with strong roots in the Netherlands, we value continuation of Eneco’s Dutch profile and local engagement—and we understand and appreciate the various interests of those involved.”

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