Fonds de Réserve pour les Retraites (FRR), the €36.3bn French pension reserve fund, has put on hold a tender for up to €3bn of passive/quant equity mandates while it focuses on implementing its new €2bn allocation to French illiquid assets.

The French government last year granted FRR permission to invest €2bn in illiquids over a two-year period, the aim being to obtain higher returns without the volatility that has characterised equities, and to support the growth of the French economy.

The fund has already committed €345m as part of its new €2bn move into illiquids: €200m to the intermediate housing fund (FLI) managed by Société Nationale Immobilière and €145m to the NOVI fund set up by Caisse des Dépots de Consignations, which invests in small companies’ private and listed equity and SME loans.

This leaves FRR with some €1.7bn of its illiquids allocation to put to work, and it is the deployment thereof that will be “the main project for 2016”, according to Yves Chevalier, a member of the board at FRR.

“There’s a lot of operational set-up required, and we will be working flat-out on this,” he told IPE in Paris last week. “One of the main tasks for this year is to define requests for proposals.

“Everyone is trying to capture the illiquidity premium and returns from unlisted assets.”

An FRR spokesperson confirmed that a tender announced last year had been suspended to allow FRR to concentrate on implementing its “new mission”, and that the decision was also a function of the resources dedicated to this.

The fund has only got to the first stage of candidate selection, according to the spokesperson.

The manager search that has been put on hold dates back to last summer and was a tender for constrained passive equity management, split into three lots with up to eight mandates available across the three.

The largest lot was for up to €2bn and was for management of standard or optimised indices replicated to take into account certain constraints, notably the exclusion of certain stocks decided by FRR.

The second and third lots, each for up to €500m of assets, were for quantitative management targeting outperformance of benchmark euro-zone and developed country equity indices, respectively, with a maximum ex-ante tracking error of 3% per annum in each case.

FRR last week announced that it returned 3.08% over the course of 2015, crediting its return-seeking asset portfolio for the result.

Earlier this year, it awarded 11 corporate bond mandates for a total of up to €8.5bn.