France’s Ircantec revamps entire portfolio on RI lines.
Ircantec is not a pension plan name you will hear often outside of France. But the €6bn supplementary pension scheme for French civil servants that are not affiliated to an existing government special regime is the talk of asset managers – notably in Paris – with strong ESG capabilities. The reason is that the fund is carrying out one of the biggest restructuring of investment mandates in Europe in recent times to hire managers that can meet its ESG charter. Ircantec is re-tendering its entire €6bn portfolio along ESG lines with 10 large mandates up for grabs.
Ircantec, or to give its full name in French: “l’Institution de Retraite Complémentaire des Agents Non Titulaires de l’Etat, des Collectivités” is housed within France’s Caisse des Dépôts, the French quasi treasury fund. The Caisse, which acts like a sovereign wealth fund running assets of €225bn invested across areas as diverse as innovation, housing, job creation and green energy, has itself made SRI part of its strategic outlook for 2012 to 2014.
Ircantec’s strategic decision was taken earlier, in 2009, when its administration board took the decision to transfer the entire €6bn fund to an SRI approach, drawing up an appropriate set of ESG criteria. That followed a government direction on financial entities within the Caisse that from 2010 to 2012 they should plan the introduction of ESG-based policies with implementation from 2013-16.
Just over a year ago, Ircantec finalised its plans to go to market for a palette of best-in-class SRI mandates to be determined in two thorough selection phases.
The mandates have been issued in four lots:
Lot one is for two equities mandates of €500m each split between one World including EMU and one World ex EMU briefs.
Lot two is for three corporate bond mandates worth €800m each.
Lot three represents three mandates of €700m each in tactical asset allocation mandates with allocations of between 20 to 80% in bonds.
Lot four is two mandates of €400m each for inflation-linked bond mandates.
Martine Madouas, who has responsibility for the SRI RFPs and implementation at Ircantec and Marianne Delachaume, SRI project manager, told responsible-investor.com that for phase one of the process the fund had received a total of 61 mandate applications from 35 different asset managers. For each lot, nine managers have been shortlisted, except for lot number two where eight managers were retained.
The second phase of the tender is under way with an internal technical commission scheduled to give its opinion on the shortlisted managers by the end of March. Ircantec’s board will then take the final decisions on manager selections by the end of May. The fund has been using Paris-based Cedrus Partners as its advisor on the SRI ESG tender and had also set up an internal team to verify and challenge all the information on the mandates and the ESG criteria. A separate tender for an ESG research house has been awarded to Vigeo, the Paris-based firm.
Madouas said Vigeo had started looking at Ircantec’s current investment portfolios before they start working with the new asset managers from June to give the fund a ‘before-and-after’ SRI examination.
She said Ircantec had been influenced by the work on SRI carried out previously at FRR, the French government buffer fund, and ERAFP, the 100% SRI fund for French civil servants: “It was certainly interesting to see how they both developed their capacities and we spoke with them about that.”
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