FRANCE - BNP Paribas AM, Integral Development AM (IDEAM) and Robeco Institutional AM have been awarded SRI mandates by the funded scheme for French civil servants (ERAFP).
The total volume of assets, all in euro-denominated European equities, could rise to €1.2bn over the next four years.
"We are the first French collective capitalisation pension scheme and the first French SRI institutional investor with 100% of assets managed according to SRI principles," ERAFP's manager, Philippe Caïla told IPE.
"The investment process and the SRI approach accounted for 50% of the weighting in the final choice," said Caïla. "Risk control and reporting, and total costs of the management were also key criteria."
The chosen managers have given a commitment to optimise the financial return on the funds respecting the ERAFP SRI charter. Consequently, from the start of the mandate the asset managers will exercise voting rights attached to the financial instruments in the fund in the sole interests of ERAFP and according to the policy guidelines defined.
"A second tender, for commercial bonds, will be issued in the second half of this year," Caïla said. "After that they will come regularly. But it is a very long process."
ERAFP was launched in January 2005 to manage an obligatory supplementary pension scheme for 4.6m public servants. Its members include all state employed workers, including civil servants and military personnel, regional and hospital employees. They qualify for benefits when aged 60. Payouts will be in the form of annuities.
Assets, which totalled €3bn at the end of 2006, are invested in accordance with SRI principles. It is funded from bonus, overtime and other payments to its public service members.
Last April France's pension reserve fund, the FRR, awarded €600m in SRI mandates to five asset managers.
The ERAFP manages state bonds and assimilated securities in-house and is required to outsource the management of non-guaranteed investments.
"We are a ‘baby fund' because we were created only two years ago under a law reforming the French retirement system in 2003 and are in our initial growth phase," Caïla said. "But the fund is already a ‘baby giant' in the French pension funds industry."
At maturity, with almost €100bn funding its commitments, the ERAFP will have an investment capacity comparable to the large foreign public service pension funds, its statement said.
A stand-by mandate for European equities was awarded to Pictet AM Ltd. "I expect we will use the stand-by mandate within this year," added Caïla.
"We used a systematic process to analyse the responses to our RFP," he added. "Two of the asset managers are French but this was not predetermined, there was no nationalistic bias. We wanted managers with large capacity and skills to manage our assets. However, the choice may reflect the fact that the SRI market is very large in France."
The RFP was launched last June. Altogether 33 asset management companies participated in the tender and 16 were short-listed, ERAFP said in a statement.