Germany’s nuclear waste management fund KENFO could change its role in the future, becoming the country’s public and state sector’s central asset manager, taking on functions spanning from risk management to asset allocation, and sustainability reporting.

In addition, other functions could include investment management, including direct investments in private markets, selection and control of external asset managers in liquid markets, as well as all back-office tasks required, including finance, legal and compliance, business management, communication, IT and human resources, chief executive officer Anja Mikus told IPE.

The CEO added that, in the new role of public asset manager, envisaged by the government, KENFO would manage the assets of the first pillar generational capital fund (Generationenkapital) in the long term.

The government is preparing the ground to establish a central asset manager during this legislative period, it said in the first pillar reform proposal without disclosing names.

According to the reform put forward by the government, the fund’s manager would take over the tasks for a limited amount of time, until the end of 2026, with the possibility of extending the contract.

The fund would invest first pillar assets in capital markets to generate returns to pay out a dividend to the first pillar manager Deutsche Rentenversicherung, to slow down the increase in contributions, according to current plans.

The generational capital equity fund is expected to reach assets amounting to €200bn by 2036 to start paying out €10bn per year to the Deutsche Rentenversicherung. It  will set aside assets by taking credit at the Finance Agency (Bundesfinanzagentur), which manages public debt, according to reports.

The highest share of assets, amounting to 80%, in the generational capital equity fund could be invested in equities, and 20% in alternatives, including infrastructure and private equity, with a smaller share in bonds.

The equity allocations in the generational capital fund could look like KENFO’s equity portfolio which is broadly diversified, with stocks from developed and emerging markets, large standard stocks, including stocks from mid- and small-cap sectors, according to the fund’s financial statement.

Within private markets, KENFO invests 5% of its assets in real estate, 4.6% in private debt, 12% in infrastructure, and 7.5% in private equity, the statement added. It is moving assets from real estate to its infrastructure portfolio, it added.

The 26 asset managers used by KENFO could also play a role in managing the assets of the generational capital fund, IPE understands.

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