Versorgungsanstalt des Bundes und der Länder (VBL), Germany’s supplementary pension provider for public sector employees with €54bn in assets under management, has selected HSBC INKA (Internationale Kapitalanlagegesellschaft mbH – HSBC Deutschland) for a Master KGV mandate as the scheme realigns its investment strategy.
VBL will invest its assets through the HSBC INKA platform with a focus on asset classes including private equity, infrastructure equity, and private debt. It will also look at investments in traditional asset classes such as bonds and equities, it said in a statement.
VBL’s chief investment officer Michael Leinwand said that HSBC INKA will support the scheme in the process of implementing the new investment strategy and cement its allocation structure.
“These are prerequisites for the implementation of our private asset strategy in Germany. The capital market and administration expertise, and the portfolio transparency offered to us, [while also] strengthening our investments, were the main reasons for us to take this step and select HSBC INKA,” the CIO added.
Master KGV
According to law firm Simmons & Simmons, the Master KVG model is the preferred investment platform for German institutional investors, predominantly insurance companies, that already have a German (special) fund in place.
The Master KVG model provides such investors with a useful instrument to elect the best or preferred asset managers for each of their asset classes.
Foreign asset managers frequently use the Master-KVG model to manage a German investment fund without establishing a German management company.
VBL has introduced a new strategic asset allocation strategy and new asset classes at the beginning of this year, Leinwand told IPE.
Now the scheme’s investment strategy is tilted towards equities, private debt, private equity, government bonds, corporate bonds, real estate, commodities and cash, he said, adding that private debt, now with a 15% allocation target, and private equity (2% allocation target) will likely increase over time.
VBL has also reorganised its management in the past years, expanding its team from six employees to about 20 in the investment management function, with a separate real estate team of 20.
The investment activities are supported by risk management, monitoring, legal and back-office functions, bringing the total close to 60 staff.
Assets under management for HSBC INKA, a subsidiary of HSBC Continental Europe, has reached a record level of €383.7bn, as it has expanded its market share as a master KVG targeting institutional investors and the management of special funds (AIF) this year. It has recorded inflows of €125bn since 2020.
Urs Walbrecht, member of the management board of HSBC INKA, said that with the VBL contract, the asset manager is continuing to strengthen its focus particularly on institutional investors implementing “state of the art” asset allocations.
He added: “Alternative investments have been part of our corporate strategy for a long time. Despite significant market losses in the past year […] we are consistently expanding our business activities and supporting our customers in their capital investments [activity] with innovative and transparent options to structure diversified capital investment portfolios.”
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