NETHERLANDS – The 10 billion euro Dutch railway pension fund, Spoorwegpensioenfonds (SPF), is upping its allocation to private equity from 180 million euros to 500 million euros.
The fund began investing in private equity 18 months ago, using a fund of funds arrangement, and last year had 180 million euros invested. SPF has now decided to up this target to 5% of the overall portfolio (around 500 million euros).
Maurice Simons, private equity portfolio manager at SPF, believes there is no hurry, however, and the target of 5% could take up to eight to 10 years.
It has also been decided that further investments in private equity will not be made via fund of funds, but instead through fund manager selection. The reason given by Simons is "the lack of quality fund of fund providers." Furthermore, by investing solely with fund of funds, there is the risk that investments will be "doubled up" in one portfolio.
Private equity managers will be selected that make direct investments or that co-invest.