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Novo Annual Review 2016
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illiquid
investments
novo has invested a certain amount of its financial
investments in illiquid assets. we have an opportunistic, value-driven approach to this pool of the financial investments, which consists of: ? a significant share of the private danish real estate company, dades
a/s; and ? limited partnerships in a number of private equity funds. dades is one of denmark?s largest real estate companies with a special focus on commercial properties primarily in the copenhagen area as well as shopping centres all over denmark. our first shares in dades were acquired in 2015 for a sum of dkk 1.7 billion. the investment exposes novo to a new asset class and a platform for making new real estate investments in the future. in 2016, dades made a number of investments; most predominantly, nykredit?s headquarter in the harbour of copenhagen. to finance these investments, dades exercised a part of novo?s additional capital commitments, which increased novo?s ownership from 38% to 44% of the share capital in dades. our private equity commitments consist of a number of funds that were raised in the period 2005 to 2008. we are frequently evaluating the attractiveness of illiquid investment opportunities relative to liquid investments. it is our view that an illiquid asset should provide a significant yield premium in order to compensate for lack of liquidity. portfolio performance novo?s financial investment portfolio is based on bottom-up investment ideas. consequently, exposures to certain sectors, countries and currencies may deviate from our benchmark and lead to short-term fluctuations in relative performance. however, we believe that this approach pays off in the long run, as it allows us to deploy a more long-term perspective when evaluating our investments. since the inception of the financial investment portfolio in 2005, the portfolio return has been 7.8% p.a. and the profits have been dkk 17 billion. the weighted benchmark has returned 5.3% p.a. in the same period. the outperformance of 2.54% p.a. corresponds to excess profits of dkk 5.5 billion. 53 financial investments
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