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IPE special report May 2018

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ABP ventures forward with State Street

ABP, the world’s second largest pension fund for the e150bn assets of Holland’s civil service and education sectors, has entered into a strategic alliance with State Street Global Advisors (SSgA) to invest seed capital in fledgling specialist asset management firms.
The deals sees ABP take a third stake in State Street Global Alliance LLC, an operating unit of SSgA.
Jean Frijns, chief investment officer of ABP Investments, comments: “This is an exciting alliance that gives us direct access to a number of top-performing, highly focused players in pension fund management.”
Frijns says the venture also has the aim of fuelling innovation: “Successful asset management requires constant innovation and we are not so sure that the large institutionalised asset managers are the best breeding grounds for this.
“ We were keen to join this alliance to get successful active asset management – not that we see this as the first sign for becoming an asset manager - because in the first place we are a manager of the assets of our pension funds.”
SSgA set up its Global Alliance unit in 1997 and to date has eight participating companies.
Of these, four are investment managers: Advanced Investment Technology (AIT ) – a US quant house, Boston Capital Management – a holding company for Pallada Asset Management – a Russian securities specialist, Rexiter Capital Management – a London based active emerging markets outfit, and The Tuckerman Group – a US real estate firm, will join the ABP/State Street venture.
ABP has also selected the four managers for investment mandates to the fund’s assets – a process it says followed normal due diligence procedure.
The venture capital slant for ABP comes as part of a stronger focus on active investment, under which the fund says it will expand private equity from the present one per cent level to four per cent in the next two to three years.
ABP’s current asset mix of 40% equities, 52% fixed-income and 8% real estate (conservative against the Dutch average) will also shift this year in the hunt for higher investment returns - with equities to rise to 52% and an emphasis put on structured finance, private equity and credits for the rest of the portfolio.
John Snow, chairman of State Street Global Alliance, says the partnership will be open-ended in terms of capital allocation – investing as and when opportunities arise, but adds that average strategic capital input in a firm will be in the order of US$5-10m.
State Street, he says, will also benefit from the alliance by using ABP as a sounding board for its own product development for European institutional clients.

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