Metal industry scheme PME has sold its 16.5% stake in MN, to fellow pension fund PMT, which now has 95% ownership of the pension provider, one of the largest in the Netherlands.
The reason for the sale is that PME had plans to move its pension administration from MN to competitor TKP at the start of this year. MN is remaining as PME’s asset manager, however.
According to PMT, PME’s stake was valued at €7m but the two pension funds agreed a symbolic acquisition fee of €1.
Despite increasing the share of its ownership to 95%, PMT continues to value its stake at €39.7m in its annual report.
The only other remaining shareholder of MN is Koopvaardij. The fund for merchant shippers has a stake of 5% in the firm.
“Because of MN losing a large client in PME it is also foregoing future revenues and profits and therefore deserves a lower valuation,” a PMT spokesperson said.
The ongoing reorganisation of the firm, which will involve the loss of one fifth of jobs, will also lead additional costs that will negatively impact the value of the firm, according to PMT.
Private equity pushes up costs
PME saw its asset management costs rise from 0.49% in 2020 to 0.57% in 2021. The rise was mostly due to higher performance fees paid to private equity managers, as was the case with ABP and PFZW earlier.
PME paid €229m in management and performance fees to private equity managers, or 72% of all its management fees.
PME manages its equity and bond portfolios almost entirely passively with the exception of high-yield bonds and emerging market debt.
“We are not a supporter of performance fees,” PME said in its annual report. “However, in order to realise the returns that fit with our pension ambition it is necessary to invest private equity. We need to permit performance fees in this asset class as this is customary. It is a custom we cannot change on our own.”