Pantheon lands account from German pension giant

German pension fund Bayerische Versorgungskammer (BVK) has committed hundreds of millions of euros to a separate account with Pantheon.

Private equity firm Pantheon and €50 billion German pension fund BVK have established a private equity programme as a separate account. The firm would not disclose details, but a source close to the contract stressed that the duration is very long-term and worth hundreds of millions of euros.

The account will invest pro-rata alongside Pantheon’s fund of funds programme, however is not bound to this investment strategy. Some capital from the account has already been deployed but the firm would not disclose any information about investments.

The separate account has a global mandate, with a focus primarily on buyout, venture capital and growth equity in North America, Europe and Australia, as well as growth markets in Asia, Latin America and Africa. BVK has invested in private equity since 2001, and as of June 2011 had €740 million allocated to the asset class, according to information from Private Equity International’s data provider Private Equity Connect

A source close to the firm stated that BVK wanted more control over its investments, therefore would benefit from a separate account. Due to their four-year relationship and the size of the commitment, Pantheon agreed to a separate account solution.

BVK was not available for comment. 

The separate account arrangement is becoming common in the fund of funds market and managers are increasingly making special arrangements for investors that want customised treatment. Influential investors may like a firm, but not their terms and conditions. These separate accounts therefore include economics that provide LPs with more influence and control in their investments allowing them to drive the process much more than traditional funds. 

Significantly, separate accounts also often offer investors discounted management fees. The California State Teachers’ Retirement System recently outlined its private equity goals for the next year, highlighting fee reduction through separate accounts as one initiative. 

Pantheon often organises these tailor-made deals as large, sophisticated investors look for more flexibility in their contracts. In 2010, Private Equity International reported on Pantheon’s closing of a $300 million separate account with the Ohio Public Employees’ Retirement System. The firm would not comment further about its separate accounts.