France’s €12bn ERAFP tenders for €865m in SRI convertible bond and real estate mandates

Huge ESG tender will follow fund’s SRI charter.

ERAFP, the €12bn Paris-based 100% SRI pension fund is seeking asset managers to run a series of real estate and convertible bond mandates worth in total about €865m in one of the biggest requests for proposal (RFPs) in Europe in recent months. The retirement fund for 4.6 million French civil servants takes in annual contributions of €1.7bn making it one of the continent’s fastest growing funds. The latest tender seeks managers for two real estate mandates, a €310m unlisted property brief in France, which will have two stand-by managers, and a €345m unlisted property brief for European OECD member countries, again with two stand-by mandates. Separately, the fund is also looking for managers to run convertible bond mandates worth €80m for a Europe portfolio and €130m for a global portfolio. Both convertibles mandates will not be benchmarked, but must be based on ERAFP’s best-in-class SRI approach. ERAFP is one of a small number of 100% SRI funds around the world. All its investments must meet an investment charter that includes rule of law, human rights, social progress, democratic rights, environmental and governance standards. The fund runs a best-in-class sustainability approach for most of its investments.For the real estate mandates, which significantly will have a duration of ten years, ERAFP said managers would have to meet its SRI charter and that the French investments would focus on the office, retail and housing sectors. In November 2011, the fund awarded its first real estate mandate for €40m to AEW Europe SGP to acquire and manage a Paris office building. In an interview with RI in 2009, Philippe Desfossés, Chief Executive at ERAFP, said the fund planned to earmark a good portion of its future cash flows to property: Link to article
The new SRI convertibles mandates require the winning fund managers to analyse their convertible bond selections and reference indices based on ERAFP’s best-in-class ESG strategy for equities and bonds, either via the fund manager’s in-house capabilities or via external providers.
The fund said the initial duration of the convertibles mandates would be for four years with the possibility of a roll-over for two successive two-year periods.
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Link to recent RI articles by Philippe Desfossés
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