Side Letter: French pension eyes more PE, ECI’s second bite, Atomico raises

It's time for France's retirees to embrace le capital investissement, says its €33 billion pension reserve fund. Plus: ECI joins the roll-over investment party, Atomico raises and Japan braces. Here’s today's brief, for our valued subscribers only.

Just happened

More PE? Mais oui!

Olivier Rousseau

Fonds de réserve pour les retraites, France’s pension reserve fund, will increase its PE exposure from 3 percent to as much as 5 percent over the next three to five years, executive director Olivier Rousseau (pictured) tells PEI. As part of this, FRR plans to put around €1 billion to work over the next two years, mainly in tech investments in France via venture and growth funds.

  • FRR has around €33 billion in assets, according to PEI data.
  • Fundraising by France-dedicated PE firms reached a record €18.7 billion in 2018, boosted by an increase of more than 80 percent on the previous year in commitments from both local and global pensions, according to a report from France Invest.

Going twice

ECI Partners has become the latest firm to hold on to an asset after exit. The London-headquartered growth firm sold part of its roughly 50 percent stake in auction technology provider ATG to TA Associates, which combined ATG with an online marketplace it acquired from Primus Capital. ECI then reinvested in the combined entity via a minority stake. It’s the latest example of so-called “rollover co-investments”, as we examine here.

Less risk, please

Coronavirus fears have already taken a visible toll on Hong Kong and Singapore, where shoppers can be seen queueing for hours to purchase toilet paper or, crucially, face masks. Japan could be next: a senior executive at a Tokyo-headquartered firm tells PEI that, as of Monday, all staff have been advised to wear face masks during meetings. Anyone making a trip to the land of the rising sun should pack accordingly.

Up and atom!

London-based Atomico has just raised its largest-ever fund to “to partner with mission-driven European founders at Series A and beyond”, the firm said this morning.

  • Atomico was set up by Skype founder Niklas Zennstrom, who sees tech start-ups as providing solutions to many of the world’s problems. We profiled him back in 2018.

Essentials

In sync with investors. Fans of our Investor Calendar (example above) will be pleased to know you can now sync this with Outlook. View global institutional investors’ current and upcoming investment and board meetings directly in your mail app. Email researchandanalytics@peimedia.com for details.

Silencing the critic. In news you may have missed, the California Public Employees’ Retirement System has downsized its investment committee, removing one of its most outspoken members in the process, CIO magazine reported. Margaret Brown has been one of the most vocal advocates of transparency when it comes to CalPERS’ private equity fees and terms, even as consultant Wilshire suggested its openness around its PE programme was working against it.

LP meetings. Here are some LP meetings to watch out for this week.

Dig deeper

Institution: Virginia Retirement System
Headquarters: Richmond, US
AUM: $82.7bn
Allocation to alternatives: 24.08%
Bitesize: $100m-$200m

Virginia Retirement System has approved $350 million-worth of private equity commitments comprising $150 million to Insight Partners XI and $100 million apiece to Madison Dearborn Capital Partners VIII and Odyssey Investment Partners Fund VI. The $82.7 billion US pension has a 15 percent target allocation to private equity that stands at 11.9 percent, as shown below.

For more information on VRS, as well as more than 5,900 other institutions, check out the PEI database.

He said it

“There are wretched excesses in a lot of well-paid hedge fund and private equity businesses”

Berkshire Hathaway vice-chairman Charlie Munger warned the investment management industry that it should prepare for tougher times ahead at a portfolio company annual meeting last week.


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Today’s letter was prepared by Toby MitchenallAdam LeRod JamesCarmela Mendoza and Alex Lynn.


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