GERMANY - Energie Baden-Württemberg (EnBW), Germany’s third largest energy firm, is planning a sweeping revamp to its €3.8bn in corporate pension assets.
EnBW currently employs 16 different investment companies, known in German as KAGs, to manage its pension assets. The form of administration for these assets is the traditional Direktzusage (book reserves).
Sources familiar with EnBW’s plans have told IPE that the firm wants to cut the number of KAGs employed to just four to cut costs and boost efficiency. EnBW’s transition to the new International Financial Reporting Standards was also a factor, they said.
Sources said the four slots would likely be so-called “master funds”, adding that all 16 asset managers working for EnBW would have to bid for them. Major German asset managers like Deutsche Asset Management, Allianz Global Investors and Deka all offer master funds, though Universal-Investment is currently the market leader.
In a master fund construction, back-office administration of all the client’s institutional funds are centralised within one provider. In EnBW’s case, its assets are invested in no less than 44 institutional funds, known as Spezialfonds in German.
When a German institutional client opts for a master fund, it typically hires an investment consultant to help select and monitor portfolio managers. The sources said that EnBW had not begun the formal process of hiring a consultant, though there was speculation it was being advised by German consultant FERI.
Neither EnBW nor FERI was willing to comment. The head of investments at EnBW is Wolfgang Maier, who is overseeing the reorganisation.
EnBW’s traditional business is supplying power to the German state of Baden-Württemberg. Yet in the past few years, it has emerged as Germany’s third-largest energy firm after RWE and E.ON. It has 17,700 employees and annual sales of €9.8bn.
The firm has been rocked by two pending investigations into charges of accounting fraud on behalf of its current and former chief executives.