PGGM, the Dutch pension fund asset manager, has created a monster €4 billion ($5.4 billion) property vehicle seeded by around 70 global fund interests owned by its biggest client, Pensioenfonds Zorg en Welzijn (PFZW).
The idea is to next sell stakes in those interests to smaller pension fund clients of PGGM, giving those clients instant access to global real estate that the underlying property fund managers have invested in.
PGGM has decided to pool PFZW’s investments to become more efficient, take advantage of economies of scale and get better deals for clients, according to Guido Verhoef, head of private real estate.
According to market participants, PGGM is not the only large Dutch fund manager that has been working hard to pool the interests of a large client. APG is another firm to take advantage of the structure, with its APG Strategic Real Estate Pool.
Ate Veenstra, a partner in the Netherlands office of law firm Clifford Chance, which has been advising PGGM, said: “What is happening in this market – and PGGM is a leader in this – is that pension funds increasingly are not simply investing on a standalone basis through a discretionary management agreement. Instead they are trying to achieve economies of scale, and cost and administrative efficiency, so they are investing on a pooled basis instead of buying interests in property funds for each of them separately.”
He added that investing jointly was a particular benefit to smaller pension funds and that the idea of pooling assets was about asset managers being able to serve more than just their main client.
As well as pooling property interests into a vehicle, PFZW has also pooled its other alternative assets investments into new vehicles, again with the idea of selling stakes to other pension fund clients of PGGM.