French civil servants fund to launch two real estate vehicles
FRANCE - The French Public Service Additional Pension Scheme (ERAFP) is seeking to launch two new real estate funds targeting properties in France and Europe as part of its plan to diversify its portfolio.
In an interview with IPE, Catherine Vialonga, chief investment officer, said the pension fund had recently awarded asset manager AEW Europe SGP a €40m real estate mandate and would consider further investments in the future.
This mandate, which will aim to acquire and manage an office building in Paris, is the first investment in the asset class for the French pension fund, which currently manages €11bn of assets under its socially responsible investment (SRI) programme.
Vialonga said: "Given our positive cash flow and our long-term liabilities, investing in the real estate asset class makes a lot of sense.
"Even though we have not totally defined which real estate strategy to put in place, we will look to diversify our portfolio into several segments, such as offices, commercial and residential properties, primarily in France and then across Europe."
Vialonga also said ERAFP was currently studying the option of setting up a French and pan-European fund to that aim.
"It is too early to talk about the amount we will invest in the asset class, but, at first, our total allocation should reach 1-2% of our global portfolio," she said.
ERAFP is also looking to invest in other alternative asset classes such as infrastructure and private equity.
Earlier this year, the pension fund, which allocates around 75% of its portfolio to bonds and 25% to equities, opted for risk-weighted SRI indices in the euro-zone listed equity mandates it awarded last may.
In a previous interview with IPE, Olivier Bonnet, head of SRI at ERAFP, justified this move by saying the index mandates provided better diversification and risk management to their portfolio, in addition to being cheaper than active mandates.