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Fondo Priamo tenders Italian private debt mandate in alternatives push

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Fondo Priamo, Italy’s second-pillar pension fund for public transport sector employees, is tendering an Italian private debt mandate.

Priamo, which managed €1.2bn at the end of last year, intends to implement the allocation to private debt through a fund-of-funds structure.

The size of the mandate will be €15m, around 1.2% of total assets.

Managers have until 3 February to provide the required documentation

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Throughout the manager search, Priamo is being assisted by Link Institutional Advisory, a consultant based in Lugano, Switzerland.

If the allocation is successful, the fund will be among the first second-pillar trade union-backed pension funds in Italy to invest in private debt.

Osvaldo Marinig, chairman at Priamo, told IPE the fund-of-fund structure was chosen to ensure appropriate diversification.

He said implementing the allocation through a fund-of-funds structure would be a challenge, given the lack of similar investment by Italian schemes.

The project will require intense dialogue with the pension regulator, COVIP, Marinig added.

The fund is planning to add private debt to its evolving alternative assets portfolio, following a review of the strategic asset allocation that took place at the end of 2015.

As part of the review, Priamo increased the strategic allocation target for alternatives from 5% to 7%.

Marinig said the fund was evaluating other asset classes for the rest of the alternatives portfolio.

Marinig explained that private debt was preferred to real estate, for reasons including the timing of the investment.

The fund had foreseen an allocation to real estate around two years ago but never implemented the strategy.

But Maring said the time to invest in real estate was now less than ideal.

Other incentives for the investment were the potential risk-adjusted returns and cashflow profile of investments.

During 2015, the fund moved from a benchmark approach to an absolute return one.

Among the reasons for this change were fluctuating membership figures.

Marinig noted the fund was maturing more quickly than others, with the members’ age profile getting older.

However, 2016 will see a review of collective public transport sector agreements, and a wave of redundancies is expected.

At the same time, Marinig expects the fund will receive a significant influx of members, as the sector’s trade unions agree to a form of automatic enrolment as part of the new contractual agreements.

The model – whereby employees are automatically enrolled in the fund with a minimum employer contribution but no obligation to contribute themselves – has already been adopted by Prevedi, Italy’s construction sector scheme.

As a result of the likely introduction of automatic enrolment at Priamo, Marinig foresees that membership could double, although assets will grow much more slowly.

For more on Fondo Pensione Priamo’s investment strategy, see IPE’s recent interview with chairman Osvaldo Marinig

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  • QN-2558

    Asset class: Private Equity.
    Asset region: Global or Swiss.
    Size: USD $5-10m.
    Closing date: 2019-08-20.

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    Asset class: Multi Assets.
    Asset region: -.
    Size: EUR 15m (may be split into two mandates EUR 7.5m).
    Closing date: 2019-09-06.

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    Closing date: 2019-08-30.

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