The French government set the ball rolling on one of the world’s largest institutional RFPs with the formal naming last month of the executive committee that will look after the administration of the e13bn French pensions reserve fund (Fonds de Réserve).
The fund was created a year and a half ago by the French government, but for political reasons linked to last year’s elections, has taken some time to become fully operational.
While a management committee for the fund has already met twice and the fund’s legal framework made official, the civil servants looking after the fund had principally been working on admin, law, accounting and IT issues to date.
The naming of the three-man executive committee, comprised of chief executive officer of France’s Caisse des Dépôts – Francis Mayer, Phillipe Most and Antoine de Salins, takes the Fonds de Réserve to the next level – the appointment of managers to run the money.
To this end, the committee has already begun processing the submissions made by consultants to advise on the investment strategy for the fund.
The consultant RFP was put out to tender on December 25 last year.
Sources close to the Fonds de Réserve say the committee is expected to make a decision on the consultant RFP in the latter half of March.
It is thought that the consultants are likely to offer advice on investment issues, but will have minimal input on the final selection of managers to the fund.
Regarding the RFP for investment managers, a likely timeframe for the tender process is that it will be started by the end of May/start of June, with a final decision on managers expected during October.
The investment manager selection decisions will be made by the new executive committee using advice given by an independent four-person professional panel. It is not known how many managers will be taken on to run the assets of the fund.
The investment mandates for the Fonds de Réserve are as important for their possible future inflows as for the amount on offer today.
The original objective for the fund was to reach e150bn by 2020 in a bid to plug the future liabilities for the country’s pensions system until the worst of the pending demographic squeeze has passed.
However, receipts for the fund have not been good to date and few in France believe that the original e150bn goal is now feasible.
The fund’s objectives will discussed by the government as part of its pension reform programme this year.
Nonetheless, it is expected that at least e1.5bn-2bn will be added to the fund each year.