Fonds de réserve pour les retraites (FRR), the French public pension giant, has selected three firms to oversee dedicated private equity mandates.
Ardian, LGT Capital Partners and Swen Capital Partners will create and manage the three fund of funds, with a requirement that 80 percent of equity and quasi-equity will be invested in unlisted French companies, according to a statement. The mandates have been granted for a period of 12 years and can be renewed for three periods, each of one year.
FRR issued a call for tenders in June 2016. The move comes as part of its wider programme of investment in unlisted assets in the French economy.
The pension fund also issued private debt mandates of up to €300 million in January 2017. It will award separate mandates for growth and venture capital later this year, a source close to the matter told Private Equity International.
In July, Paris-headquartered Ardian identified separately managed accounts as a growing area of opportunity for the firm. “We won several new clients in 2016, especially in Germany where there are a lot of institutions that have not allocated money to private equity in the past but now want to build portfolios,” Ardian's UK head Olivier Decannière said in its annual report.
“In the past they would have gone into primary funds of funds but the market has switched to mandates and that [favours] big, diversified managers like Ardian,” he said.
Europe is not the only region expecting to see a rise in SMAs. Earlier this month, Elizabeth Oh, head of investments advisory for Korea at consultancy firm Mercer, told PEI that the trend could extend to Korean pension funds.
“Although they have built up their portfolio based on buyouts, they're now expanding portfolios to include co-investments and secondary investments, aiming to diversify strategy, vintage and risk with less J-curve effect,” Oh said. “We could see more mandates for co-investments in various pension funds.”
Global private markets investor Partners Group said on Thursday that it had raised €3 billion for direct investment from client mandates and other allocations.
FRR has around €37 billion of assets under management, according to PEI data.