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Dutch report
by Euro Reporter
2015-08-25 11:29:02
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Fee transparency debate takes hold in Netherlands

Although the fee controversy is currently at its strongest in the US, it has now reached the Netherlands, where pension fund PGGM announced it will not back fund managers that fail to disclose fees by 2020. José Rojo reports. In a statement published in early August, PGGM chief investment officer Ruulke Bagijn outlined a set of prerequisites to be met by asset managers hoping to receive commitments from the pension fund. First, pay and remuneration schemes need to be transparent. Performance fees should also not be charged until fund performance reaches the agreed threshold. Finally, the management bill paid to GPs should be kept at a basic level. "There is growing pressure from our clients [...] on behalf of whom we invest to no longer be silent on the size of pay," the document states. PGGM's announcement highlights the escalating controversy around private equity fees. In January, it was revealed that KKR had reimbursed fees to a number of its LPs after the US Securities and Exchange Commission (SEC) discovered that some of them, including pension funds, had been "wrongly charged" and "not properly notified" of certain expenses.

holland_400The debate gathered momentum in the US when Calpers admitted it could not track the fees it paid to private equity houses. Far from isolated, the incident illustrates a broader opacity theme voiced by the SEC itself. In May 2014, the regulator announced that more than half of the private equity firms inspected by its examiners worldwide were guilty of wrongly charging investors with "back-door" fees and insufficient transparency. PGGM's decision to put its foot down follows a turbulent few months for private equity houses in the Netherlands. A series of high-profile stories around debt-ridden portfolio companies has put several houses under the spotlight. Furthermore, politicians have targeted the industry with a set of "anti-easy-money" proposals as they questioned several GPs during a roundtable event in April. With pressure now coming from the country's second largest pension fund, this latest development could potentially spark a chain reaction as other LPs follow its lead and delve deeper into fee charges. Indeed, PGGM has been vocal about gaining support from other LPs as it seeks to improve fee transparency. "We will search for cooperation with like-minded people in the pension’s world to act collectively against unacceptable practices," Bagijn announced, adding that efforts will be made to internalise investment management operations to drive down costs. The strategy mirrors PGGM's plans, revealed by a spokesman to unquote" in July, to increase its co-investment activity in the coming months. The pension fund has already made one co-investment alongside TDR Capital in the €3.7bn buyout for Dutch fleet manager LeasePlan.

According to the Dutch Private Equity and Venture Capital Association (NVP), despite PGGM's decision to increase its co-investment activity, the industry should not worry that all LPs will go the same way. "We do see some investors setting up their own private equity arms or opting for co-investments," says Marc van Voorst, public affairs manager at NVP. "But their need to diversify to higher yielding asset classes is enormous and our sector consistently delivers good returns. It is still a mutual benefit to both sides to continue working closely together." When asked his take on PGGM's accusations of opacity in private equity, van Voorst highlights the progress the industry has already made in this area: "Enormous steps have been made so that Dutch pensions have plenty of information on cost fees, which is why they are referred to as the most transparent in the world." Whether or not these steps to improve fee transparency placate LPs, their move to ramp up co-investments and direct investments can be seen as a positive; it could be a wake-up call for GPs to stay on top of their game. "The entrance of new players can only be a challenge to remain the best in the market. Something like this keeps everyone focused," says van Voorst.


Dutch population shrinks as immigration grows in the Netherlands

The Dutch population grew less strongly in the first half of this year than in the same period last year. The population grew by a total of 22 thousand people in the first half of 2015. This is mostly due to more deaths, fewer births and relatively high immigration. This is according to figures released by Statistics Netherlands on Thursday.

The natural growth of the Dutch population – the difference between death and birth – was quite low. A relatively high number – 77 thousand – people passed away and fewer children were born – 82 thousand, compared to 85 thousand in the first half of 2014. In the first quarter there was even a few weeks where more people died than were born. On balance, the Dutch population grew by 5 thousand people in the first half of 2015, compared to 16 thousand in the same period last year.

The number of immigrants coming to live in the Netherlands was also higher in the first half of this year than in the same period last year. A total of 82 thousand people settled in the Netherlands in the first 6 months of this year – 6 thousand more than last year. Emigration also increased slightly – more than 65 thousand people left the Netherlands. On balance, the population increased by 17 thousand people by foreign migration – 4 thousand more than in the same period last year.


5 people in the Netherlands are expecting a baby ... together

While we know that the idea of a white picket fence family isn't as common today as it used to be, this group of five people in the Netherlands is proving that family truly is what you make of it. This specific family unit is made up of two couples -- Jaco and Sjoerd and Daantje and Dewi, and the couples have known each other for ten years. They've considered having a child together for about six years now. The fifth family member is Sean, an Australian man who has been Jaco and Sjoerd's partner for the last three and a half years. The family has decided that Sean will play an equal role in raising the family's future son.
In regard to Sean's relationship with Jaco and Sjoerd, Sjoerd said, "Jaco and I have been married for eight years now. Unfortunately we can't marry Sean as well, otherwise we'd have done it in a heartbeat."  The family has to do this legally because in the Netherlands, a child can still only have a maximum of two legal parents. However, it is allowed for a mother to appoint an additional legal parent.
The family has made a plan to have one legal parent in each household because they're "splitting the upbringing equally," Dewi said. Well, this baby definitely won't be short on love (or parents) when he finally enters the world.

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