France’s €12bn ERAFP tenders for up to €100m in multi-manager mandates

Strategy for one of world’s fastest growing pension funds is part of gradual asset diversification.

ERAFP, the €12bn Paris-based French Public Service Additional Pension Scheme, a 100% SRI pension fund, is tendering 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 4.6 million beneficiaries, 41,000 employer organisations under its umbrella and close to €1.7bn in member contributions each year. The fund will award three mandates – one active and the other two stand-by – for multi-manager strategies that cover diverse asset classes and strategies. It said the multi-managers selected would adopt a fundamental approach without any benchmark constraint to build a portfolio based on a rigorous asset allocation and fund selection process in compliance with its SRI guidelines. The deadline for tenders is September 13, 2012. The fund is not using an external consultant for the manager selection.
ERAFP’s ‘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 Principles for Responsible Investment.The winning manager portfolios will be managed as a French general purpose fund (FCP) dedicated to ERAFP. The French fund said that the indicative amounts it expects to invest over the coming three-year period could reach around €100m. The length of the initial contracts for asset managers is four years, and ERAFP said it could extend these by two successive two-year periods. ERAFP’s new multi-manager approach is part of a gradual diversification of its asset allocation. The fund started its SRI strategy in 2006 with a 100% allocation to European government bonds and SRI research on state bonds. Since then, the fund has branched out, first into equities – euro, then later international – and an index strategy for small- and mid-sized companies, as well as other asset classes including convertible bonds and sustainable real estate. In 2009 it set a strategic target for equities of 25%, but it is building this exposure up gradually to allow it maximum tactical implementation.
Link to RI interview with Philippe Desfossés, CEO, ERAFP
The tender file is available at Link under the reference: SDG 2012-11

Philippe Desfossés, CEO, ERAFP, will be speaking at RI’s ESG in RFPs and the Asset Manager Selection Process event in London on October 12, 2012.
Its sister event in New York will take place on September 14.