FRR selects winners of €300m ‘beauty contest’

The French pension fund will invest €300m in the purchase of debt securities related to French SMEs through fund structures managed by Idinvest and Lyxor.

The Fonds de Reserve pour les Retraites (FRR) has selected two French asset managers to manage its €300 million debt securities acquisition strategy.

Idinvest Partners and Lyxor International Asset Management, which was recently acquired by Tikehau Investment Managers, were selected following an eight-month search for fund managers.

In May, the FRR had announced it was looking to invest in strategies targeting the financing of small and medium-sized enterprises in France through the acquisition of debt securities or debt securities linked to loan instruments.

The duration of the investment is 12 years with the possibility of a two-year extension. Both Idinvest and Lyxor will manage a €150 million allocation in a separate fund structure.

A separate search is still under way to find managers for a €300 million investment in corporate debt within France. A decision on which firms will manage the strategy is expected shortly.

Salwa Boussoukaya-Nasr, chief investment officer at FRR, said that the competition was “intense” and that “it was difficult to choose between high quality offers”.

“In the end it is a beauty contest,” she said, “We look at financial solidity, operational risk and the experience of the team and their ability to select deals. Good investment processes are probably the biggest criteria in the request for proposals,” she continued.

The FRR is a public sector investment body established in 2001 and has more than €37 billion of assets under management.