ERAFP seeks managers for first direct infrastructure, PE investments
French civil service supplementary pension scheme ERAFP has tendered a €150m infrastructure and a €100m private equity mandate, acting on new investment freedoms granted by the central government early last year.
Investments must be made in accordance with the €23.5bn fund’s socially responsible investment (SRI) approach for the relevant asset class.
The fund – L’Etablissement de Retraite Additionnelle de la Fonction Publique – already makes private equity and infrastructure investments, but this is via a multi-asset mandate run by Amundi.
Its decision to invest directly in private equity and infrastructure comes after a central government reform of the fund’s investment framework, effective February 2015.
It expanded the fund’s investment universe, having been previously skewed heavily toward bonds due to restrictions on non-bond investments.
Today’s tender announcements are a concrete manifestation of ERAFP’s asset allocation shift in response to the lifting of these restrictions.
The fund would like to invest in “critical” infrastructure in OECD countries, across equity, quasi-equity and debt, according to tender information.
Eligible assets for investment by ERAFP could be part of public/private partnerships (PPPs), the privatisation of state assets or the reduction of private companies’ commitments in infrastructure assets.
“The mandate holder’s goal will be to deliver regular returns and optimise long-term performance with a moderate risk approach that will, in particular, take into account the reputation risk for ERAFP and minimise the risks specific to this asset class,” ERAFP said.
It is also searching for a private equity investment manager to help it “support the growth, expansion and business transmission projects of unlisted European SMEs and mid-tier companies” by investing in their equity or quasi-equity.
Both mandates are for an initial term of 10 years, which ERAFP may extend by two successive periods of two years each.
In other news, Novo 2, one of the bond funds ERAFP is invested in alongside other large French institutional investors such as Fonds de Réserve pour les Retraites (FRR), has participated in another Euro private placement (Euro PP) for a French SME.
The fund has invested €25m in a €124m unlisted bond for Laboratoire Français du Fractionnement et des Biotechnologies (LFB), a 100% government-owned biotech company.
Managed by Thikehau IM, Novo 2 recently invested €10m in a €60m, seven-year private placement for Direct Energie, France’s third-largest electricity and gas provider.
Also, Caisse des Dépôts et Consignations, the French public sector lender, is setting up a €100m institutional investor-targeted fund to invest in social enterprises.
The platform has been dubbed InvEss and is being set up in co-operation with French social finance association Finansol.