FRR to invest 6 percent of portfolio in private equity

The French pension manager’s €1.5 billion allocation will be its first move into the asset class

Fonds de Réserve pour les Retraites (FRR), the French Pensions Review Fund, has announced plans for its first allocation to private equity.
The €24.8 billion ($29.8 billion) pension fund manager said in a statement that it plans to invest €1.5 billion, almost 6 percent of its total portfolio, in the hope of raising its returns, cutting its risk through diversification, and contributing to the corporate sector and wider economy.
FRR’s allocation will be divided into four lots: a €450 million European diversified portfolio; a €450 million North American diversified portfolio; a €150 million international portfolio of secondary positions; and €250 million for European small and mid cap business. The pension manager said in a statement that it hopes that the latter will help to finance the consolidation of SMEs in certain key industries.
The group will delegate the management of the four lots to fund-of-fund managers, with no manager being responsible for more than two lots. Approximately two thirds of its allocation will be to European funds, with 30 percent going to North America and 5 percent to the rest of the world. The group aims to spread its commitments between funds of vintage years 2006 to 2010 in order to diversify its risk
FRR is the second large European pension fund to announce an allocation to the asset class in recent days. Last week Dutch funds ABP and PGGM alloted €11 billion to the Netherlands’ AlpInvest Partners.