Delta Lloyd, PGGM exit market for APF consolidators
The Delta Lloyd General Pension Fund is to exit the market after falling too far behind its competitors in the wake of the takeover of its parent company Delta Lloyd.
Only months after the vehicle – known as a “general pension fund” (APF) – received its license from supervisor DNB, Delta Lloyd was taken over by NN Group, which already had an APF, De Nationale.
APFs are consolidation vehicles in which small and medium sized Dutch pension funds can pool resources such as investment and administration under the oversight of one board.
According to Ruud Hagendijk, chairman of Delta Lloyd APF and former CEO of the €130bn asset manager MN, its board had concluded that continuing was not sensible, despite finding parties willing to carry out both administration and asset management.
“As a consequence of uncertainty around the takeover, we had fallen behind on the acquisition of clients,” he said. “Keeping an APF running costs at least €1.5m a year. And although we had the means to continue, acquisition is a slow process. Moreover, we would have needed more than €2bn of assets to make the business profitable.
“As we had insufficient guarantees from interested parties, we didn’t want to continue for too long, in order to avoid the participants paying the price.”
According to Hagendijk, a merger with NN’s APF wasn’t on because both boards found that the governance structures weren’t compatible.
The Delta Lloyd APF was the smallest of the six commercial APFs in the Netherlands, with just two clients.
Hagendijk said that the Delta Lloyd APF would try to relocate their pensions elsewhere, possibly with another APF.
Clients mull future after PGGM pulls its support
Separately, the chair of Volo has expressed disappointment at PGGM’s decision to pull out of the APF market as a result of a strategy change. PGGM launched Volo as the first non-commercial APF in 2016.
Speaking on behalf of the former Pensioenfonds Jan Huysman, one of Volo’s two clients, Erik Goris said: “We have spent much time, money and energy setting up the business, which needs time to establish and distinguish itself.
“We were in discussions with seven pension funds, which had received quotes based on our proposition offering the benefits of scale and expertise of PGGM. At several schemes, we were the preferred partner. Had they joined, our current assets of €330m would have more than doubled.”
The Volo chair said that the APF and its two clients would assess all options in the interest of members. However, given Delta Lloyd’s exit from the market, he said he didn’t see many strategic players in the market that were willing to take over an APF.
That said, he noted that there was no real hurry for finding a solution.
Goris added: “PGGM has made clear that it was willing to complete its contract, and we could do the same if our clients want to.”
Gerrit Timmer, former chair of Volo’s other client, Pensioenfonds Ortec, said: “PGGM’s choice is not the one we had hoped for.”
According to Timmer – co-founder and chief financial officer at Ortec – both the pension fund and the APF wanted to stick to the contracts between Volo and PGGM, as well as between Ortec and Volo.
“But I can also imagine that in this new situation, it could be attractive to all parties not completing existing contracts,” he added.
The Ortec scheme transferred its 1,400 members and €64m of assets to the Volo APF at the start of this year.
Volo has a seven-year contract with PGGM, and has committed to its clients for five years.