Swedish first-pillar pensions giant AP7 has awarded a new mandate to SimCorp to continue supplying its investment management system following a public procurement process.

While the Copenhagen-headquartered software firm has been in the role for 23 years, it beat three other bidders in the latest tender for the contract, according to a notice on the EU’s TED tendering service.

The initial contract length is four years, and can be renewed after every fourth year after that if AP7 is satisfied. But after 16 years, a new public procurement process has to be initiated, a spokesman for SimCorp said.

Tina Nylund, AP7’s chief operating officer at the SEK905.2bn (€79.8bn) state pension fund, said: “We were looking for an integrated platform that fulfilled as many of our RFP requirements as possible.

“The high-level scope has primarily been focused on back office and middle office functionality but also on front office functionality to some extent,” she said.

Nylund said it had also been of great importance in the tender that the system vendor had a strategic roadmap with a clear vision and high commitment in research and development.

Last month, AP7’s chief executive officer Richard Gröttheim told a Frankfurt alternative investors’ conference that the fund – which provides the default option in Sweden’s premium pension system –  is planning to boost investments in alternative assets to reach around 20% of its total assets.

Changes to the national pension fund’s investment rules took effect this year, allowing it to further diversify its investment portfolio into alternatives.

Nylund said the new rules allowing a gradual increase in real estate, infrastructure and other assets meant AP7 had to address many issues, ranging from obtaining the necessary knowledge in-house about the products, to more practical questions such as how to make valuations.

“For us, it is important to view the AP7 and SimCorp cooperation as a true partnership, and to have confidence that SimCorp’s products will be able to address not only today’s needs but also new challenges in the future,” the COO said.

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