Fonds de Réserve pour les Retraites (FRR) is to invest €2bn in French illiquid assets, including infrastructure and real estate, after gaining permission to invest beyond 2024.

Olivier Rousseau, a member of the €37.2bn French pension reserve fund’s executive board, told IPE FRR had last year begun “intensifying” its battle to once again invest in illiquid assets in light of the “horrible” low interest rates.

He said that, after sending a letter to the ministries for finance, the economy and social affairs late last year, FRR was granted approval invest €2bn in French assets boosting economic growth over two years, allowing it to increase its private equity exposure to 3% of assets, and invest in property and infrastructure.

The new strategy sees a change in emphasis for FRR.

Following the 2010 pension reform during the presidency of Nicolas Sarkozy, drawdowns to close the deficit in the social security systems were brought forward to 2011 from its initial target of 2020.

The fund, after making 14 annual payments of €2.1bn by 2024, was expected to be closed.

As a result of the reform, the fund switched to a largely liability-driven investment strategy and halted all further investments in illiquid assets.

Notwithstanding the switch in focus, the fund has been able to return 6.1% per annum since the 2011, managing a return of 8.75% last year

The new, €2bn strategy has seen the fund invest €200m in the intermediate housing fund (FLI) managed by Société Nationale Immobilière, and commit €145m to the NOVI private equity fund – the latest in a suite of three funds set up by Caisse des Dépôts et Consignations to offer loans and equity to small companies in France.

The board member also said a “large portion” of the infrastructure exposure would come from green projects.

Rousseau said final details of the new investment strategy, such as FRR’s appetite for taking on construction risk when investing in infrastructure, were likely to be finalised at a board meeting in early December.

Unlike in 2010, when the reserve fund was on the cusp of awarding several property mandates, Rousseau said FRR would not be building up any internal capacity to oversee the investments, citing the two-year window granted to deploy the €2bn.

He also defended the limits of FRR’s new mandate, saying it was “a good second best” that the fund was able to build up a portfolio of French illiquid assets, if not acquire holdings outside the country as part of the drive.

“Of course we would love to have broader perimeter, and to be able to invest across Europe, and across the world,” Rousseau said, “but it is already very good that we got the approval to go beyond what seemed to be an insurmountable border – the year 2024.”