Dutch pension provider Blue Sky Group, which is owned by the three pension funds of airline KLM which are also the firm’s owner, has put its asset management division up for sale.

The firm expects to transfer its asset management division to a buyer by the beginning of next year, according to chief executive officer Tom Bottinga.

“We and our clients have looked at the time after the introduction of the Pension Act,” said Bottinga.

“We think that with the current size of €25bn under management, we are not big enough to remain a frontrunner. For example, we are facing a higher regulatory burden and are required to pay more attention to ESG criteria. Scale is becoming increasingly important,” he added.

The assets under management of the firm mainly come from the three KLM pension funds for pilots, cabin crew and ground crew.

Blue Sky Group advises on the investment strategy and implements the investment policy. This includes manager selection, monitoring, interest rate and currency hedging and reporting. All investments are outsourced.

“We avoid the term fiduciary management, because everyone has a different understanding of this,” according to Bottinga.

The asset management department employs around 40 people, out of a total staff of some 250.

Eye on the future

In 2022, KLM’s cabin crew fund moved advisory services away from Blue Sky Group to Van Lanschot Kempen. This was part of a move to have looser ties with Blue Sky Group.

Tom Bottinga at Blue Sky Group

“We avoid the term fiduciary management, because everyone has a different understanding of this”

Tom Bottinga at Blue Sky Group

According to Bottinga, the decision to sell its asset management branch is unrelated to this. “The returns are good. We are doing this with a view on the future,” he said.

The sale is also in the interest of the employees involved, he said, adding: “Our staff are the basis for the good results we have shown over the years. It is important for them to find an environment in which they can continue to do thrive in the future.”

Bottinga noted it is important for Blue Sky Group’s pension funds that the sale will be completed by next year. “We and the pension funds can then focus entirely on the transition to the new pension system,” he noted.

Pension admin revenue

Blue Sky Groups has not yet started looking for a buyer of its asset management arm. Nevertheless, Bottinga expects the process to be completed by early 2025.

He declined to give an indication of the expected revenue from the prospective sale nor did he say how much money the firm earned from asset management activities last year.

Its 2022 annual report showed that Blue Sky Group reported a small overall loss, and that pension administration had become more important than asset management in terms of revenue.

Revenue from pension administration has doubled since 2019 to €21.1m, while revenue from asset management fell by some 10% to €20.9m in 2022. The drop in turnover was partly due to a decrease in assets under management by the same percentage.

Bottinga expects Blue Sky Group to continue to grow as a pension administrator. “We expect new funds to come our way in the coming years.”

Besides the KLM funds, the Philips, Mars, SNS Reaal, IFF, Staples and Nedlloyd pension funds are also Blue Sky Group’s clients for pension administration. All these funds have a combined membership of some 200,000.

This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra