PGGM to Focus Asset Management Services on PFZW | New

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PGGM, a Dutch pension asset manager, is in talks to end its services with its non-PFZW clients, who have sought legal advice on the matter.

The move to focus asset management solely on its biggest client Zorg & Welzijn (PFZW) comes shortly after the €277bn healthcare scheme told PGGM it no longer wanted to invest in pooled funds with other PGGM asset management clients.

These include the Schilders Paint Industry Scheme, Smurfit Kappa and the Huisartsen GP Fund.

PGGM was founded in 2007 as a pension administration and asset management spin-off from the PFZW healthcare sector scheme. It has since acquired additional clients for pension administration and asset management services, although most of its revenue continues to be tied to PFZW.

“Following the choice of PFZW [to opt out from pooled funds], PGGM will no longer be able to allow other participants to benefit from the advantages of these investment funds, in terms of costs and economies of scale. This is why PGGM has decided to engage in discussions with its clients regarding the termination of the provision of asset management services,” PGGM said.

The firm currently manages mutual funds for emerging market credit, equity and debt, as well as private market investments, including real estate and infrastructure.

PFZW wants to get rid of its investments in mutual funds because investing directly makes it easier to implement its sustainable investment policy, a spokesperson told IPE.

“We have noticed that agility is becoming more and more important in our investment process. In the structure of a common investment fund, where you always have to coordinate investment decisions with the other participants, it is more difficult to act quickly,” she added.

PGGM is the exclusive asset manager for Schilders and Smurfit Kappa, and also manages funds for Huisartsen, Particuliere Beveiliging and Architectenbureaus. It is not yet clear when and how PGGM will phase out its other asset management clients.

“We will decide the timing with our customers,” PGGM said. A spokesperson added that PGGM is working to close the mutual fund for listed investments by the end of this year, and is still considering options for its private market funds.

Fiduciary management

PGGM will also end its fiduciary management activities for its non-PFZW clients.

Dick Vis, chairman of the Schilders pension fund, said his fund had “in principle” found a replacement for PGGM, but declined to reveal the name of the fund’s new trustee manager.

Meanwhile, Vis plans to continue investing in the PGGM Infrastructure Fund. “This is a strategic investment that we cannot easily convert to another manager,” he said.

According to Vis, it is “pretty unique” that PGGM signaled that it wanted to terminate its services to Schilders. He said: “Usually the initiative for this sort of thing comes from a pension fund, not an asset manager.”

The value of the PGGM building decreases

PGGM’s net profit decreased to €20.9m from €29m in 2020 due to a negative adjustment to the value of PGGM’s head office of €12.4m.

The reason for this was a decrease in (expected) utilization due to the rise of hybrid working and because of “the changing office market”.

PGGM’s head office is located on the outskirts of a forest near the city of Zeist and is very difficult to reach by public transport.

Kappa Smurf

PGGM is also the trustee of the Smurfit Kappa pension fund. “We are frantically looking for a new partner and are currently in talks with two candidates,” fund manager Marco Kiewiet said.

Kiewiet noted that Smurfit Kappa would have preferred to stay with PGGM. He said: “Because of the economies of scale, we have significant cost advantages with them. On the other hand, I also understand the decision of PGGM. But for us, it is important not to suffer any financial damage as a result of this decision if we are forced to withdraw from these investment funds. We must represent the interests of our members.

Smurfit Kappa has, along with the other pension funds involved, consulted with Houthoff Buruma’s lawyers.

“Together you are stronger and at this time our interests in this matter also match,” Kiewiet said. He wondered if it was practically possible to end services for liquid investment funds by the end of 2022.

According to Kiewiet, PGGM has the right to terminate the agreement, but cannot force the participating pension funds out.

Huisartsen’s chief investment officer, Pieter de Graaf, also said he was pleased with his fund’s stake in PGGM’s infrastructure and real estate funds. He said: “It’s good to invest in this way with like-minded investors.”

Damage to reputation

The fact that several pension funds have consulted lawyers on the issue has damaged PGGM’s reputation, the firm’s annual report concludes.

The same goes for pension funds that are affected, said Kiewiet of Smurfit Kappa. “The risks we face in this case include transition risk and whether we will be able to find similar funds. We have shared our risk analysis with [regulator] DNB. »

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