French public pension fund ERAFP awards c.€210m in SRI mandates

Contract awards from 100% SRI fund

ERAFP, the €13bn Paris-based French Public Service Additional Pension Scheme, a 100% SRI pension fund, has awarded two socially responsible investment (SRI) convertible bond mandates worth around €210m in total.

The first mandate, for around €80m in European convertible bonds – non-benchmarked SRI, has been awarded to Schelcher Prince Gestion, the specialist fund firm 85%-owned by French mutual group Crédit mutuel Arkéa. Acropole AM and Natixis Asset Management have been named as stand-by managers for this mandate.

The second is for €130m in international convertible bonds – non-benchmarked SRI; it has gone to Lombard Odier Gestion, part of Swiss private bank Lombard Odier Darier Hentsch. Stand-by managers are BNP Paribas Asset Management and Fisch Asset Management.

Both mandates must comply with ERAFP’s SRI requirements.
“Accordingly, the investment firm will need to analyse each convertible bond held in the portfolio and in the index comprising the investment universe to ensure application of the best-in-class principle having regard to
ERAFP’s SRI requirements, using its own resources or by calling on external resources,” the fund said.Convertible bonds allow the holder to convert into shares of the issuing company. Just this week phone firm Nokia said it would issue €750m in convertible bonds to boost its cash position.

ERAFP had issued a restricted call for tenders in February this year.

The initial term of the contracts is for four years, which may be extended for up to four years.

In July ERAPF tendered for asset managers to run a multi-manager strategy that it says could reach €100m in size over the next three years.

ERAFP is one of the fastest growing and largest public pension funds in the world. It has almost doubled in size in the last three years and has nearly 4.6m beneficiaries, 41,000 employer organisations under its umbrella and close to €1.7bn in member contributions each year.

Its ‘SRI Charter’ is based on the following five fundamental values: respect of the right of law and human rights, social progress, social democracy, the environment, and proper governance and transparency. The fund is a signatory of the UN-backed Principles for Responsible Investment.
Philippe Desfossés is speaking at ESG USA 2012