Outlook for Project Finance - The next three years

1. Outlook for Project Finance - The nextthreeyears EWEA Annual Conference and Exhibition, April 2012

2. PensionDanmark will grow by 40 per cent by 2015 due to large inflow Year end 2015 = 22bn EUR Year end 2011 = 16bn EUR

3. Savings in a life-cycle product Investment grade fixedincome Real assets (real estate & infrastructure) Non IG fixedincome Public and Private Equity

4. Need for New Models of Financing Global need for large scale investments in renewables and green infrastructure Pressure on public finances due to public debts Pressure on the banking sector and private investors due to economic crisis and increasing capital requirements (including Basel III and Solvency II) Need for alternative sources of capital, new models for financing and a different approach of sharing risks

5. Case 1: Anholt Wind Farm – March 2011 Highlights PensionDanmark in consortia with PKA Acquired 50 per cent stake in Anholt Wind Farm for 800m. EUR from DONG Energy

6. Case 1: Anholt Wind Farm – March 2011 • Construction to start late 2011 and estimated to be complete late 2013 • Constructed 15 km off shore in depths of <20m. • 111 Siemens 3.6MW turbines = 400 MW • Annual production is 2,030 GWh • Equivalent to the yearly consumption of 400,000 households

7. Case 1: Anholt Wind Farm – March 2011 • Operation & Maintenance • Service and maintenance • Repairs and changes • 24 hours surveillance • Balance responsibility • Reporting and selling production to Energinet • Reporting and accounting • Daily administration • Financial reporting etc. • Governance • Equal board representation (budgets, major repairs, repowering etc.) • Strategic forum at senior management level • Day to day operations have been outsourced to DONG

8. Case 1: Anholt Wind Farm – March 2011 • Stable returns • High guaranteed minimum power prices until 2025 (feed-in tariff) • Concession until 2037 • Significant share of operating costs are fixed • 5Y availability guarantee from Siemens • Limited risk • “Turn-key” contract to deliver a fully operational park in April 2014 • Limited power price risk • DONG Energy has as a co-owner an interest in keeping costs low • Pay-back of investment within 10 years • Investment model

9. Case 2: Deal with EKF on ExportFinancing – September 2011 • PensionDanmark makes DKK 10bn available to EKF and will be a direct lender into the transactions • EKF takes on political, commercial and document risks in transaction. PensionDanmark has funding and liquidity risks in the transactions • The lending is on market terms with variable interest rate and callable with normal and customary penalties. Investment will yield PensionDanmark a return, which is 100-150 bp. above government bonds, with EKF guaranteeing the principle • The first investment of the new partnership was an on-shore wind farm in Sweden where Danish wind turbine producer Vestas supplies the 66 3MW turbines. • Highlights. EKF is Denmark’sexportcreditagency

10. Case 2: Deal with EKF on ExportFinancing – September 2011 Deal Helps Reduce Effects of Credit Crunch on Export Orders Long term financing on export credits have become increasingly scarce. It is often difficult to get banks and other private-sector lenders to bear the entire risk themselves on 15 year loans There is often a need for a state guarantee (or equivalent) for at least a part of the loan required in addition to the project owners’ own contribution, if a project is to be realized For EKF the deal provides: • An additional source of long term funding and liquidity for export transactions. • The added capacity makes it easier for banks to participate in deals where long term financing is needed, enlarging the financing possibilities for exporters and buyers/sponsors. • No added costs for EKF on entering the deal

11. Ambitions for PensionDanmarks alternative investments • 5 year plan with ambition to invest significant amounts in “stable alternative assets” • In the process of strengthening resources in order to: • handle more direct deal flow and to • further expand capabilities (e.g. into other asset classes) • Preferred investment structures • Direct investment potentially in consortia with like-minded investors • Co-investment with infrastructure funds • Traditional fund structures (on a very limited basis) • Goal to establish network of like-minded investors • Opportunistic, dedicated approach and efficient decision-making

12. Preferences • Asset types e.g. • Wind and Solar Farms with government guaranteed fixed in tariffs • Waste management/processing plants or biomass plants • Sub sea cables • Electricity grids • Water companies • PPP/PFI • Geographic focus • Northern Europe • North America (US, Canada) • Ticket size min. EUR 100m.

13. Investment criteria • Stable and predictable earnings • Low demand risk and correlation to the business cycles (e.g. regulated income) • Long term investment horizon (+20 years) • No/negligible construction risk • Limited pricing risk (e.g. power price) • Limited political risk • Partnering with experienced industrial players (constructor/operator) • Alignment of interest • E.g. through significant ownership stake for the duration of the investment • No or limited leverage • Adequate SRI policies

14. pension.dk/english Torben Möger Pedersen | tmp@pension.dk