Dutch pension asset managers PGGM and MN have announced a cooperation in operational due diligence of external managers that they both invest in. Joint evaluations should lead to efficiency gains for all parties involved, the pair expects.
PGGM and MN will start with monitoring 15 external managers, which mostly invest in illiquid markets such as private equity and private real estate.
In total, the two pension providers have “a few dozen” external managers in common, according to a PGGM spokesperson. The firms will continue to conduct their manager selection due diligence processes separately.
In operational due diligence (ODD), investors check whether their asset managers are in control of every aspect of the investment process.
Since PGGM and MN use “almost completely comparable” methods for this, they believe efficiency gains in the monitoring process can be achieved when done jointly.
This is also supposed to benefit the external manager concerned, as in the future it would only have to deal with one counterparty.
Arjen Pasma, chief fiduciary investments at PGGM, said: “We found each other in this cooperation because we share investments and as a consequence encounter the same ODD challenges. This makes it logical to bundle forces in evaluating the asset managers we both have in our portfolios, such as in private equity and private real estate.”
Last year, the two pension providers also announced a cooperation, when MN said it would start using PGGM’s admin software.
MN buys due diligence software tool
MN will start using the software of US firm Diligence Vault for its due diligence processes, it announced earlier this week.
According to an MN spokesperson, the agreement has nothing do with the ODD cooperation with PGGM.
“There is some overlap though,” a spokesperson commented.
“We will use Diligence Vault’s software tool, which will also be used by MN’s ODD team, to communicate with asset managers. This will allow both us and our external managers to gain time, and it will lead to increased efficiency and reliability.”