(May 22, 2013) — One of the Netherlands’ largest pension fund managers has entered into exclusive talks to acquire a smaller peer to improve economies of scale and strengthen bargaining powers.
PGGM, the company that manages the assets of the second largest pension fund PFZW and oversees €133 billion, is discussing the possibility of acquiring A&O Services, a relatively smaller outfit of around €5 billion.
PFZW provides retirement benefits for doctors, nurses and medical staff in the Netherlands, while A&O Services funds pensions for the painting, decorating and some parts of the construction industry.
A statement from the companies said both parties expected the talks to be successful and for a tie-up to take place towards the end of this year.
PGGM said it would like to enhance its knowledge, expertise, and overall assets by bringing on board A&O Services, its investment team, assets, and members. The statement added that the move would bring greater security to the smaller fund.
As a consolidated fund, the entity should be able to access lower fees, and potentially have greater ‘clout’ in the financial markets. Most of the largest pension fund managers oversee assets for a number of schemes already, as they are typically industry-wide.
A&O Services, for example, looks after various investment tasks for 22 pensions. PGGM oversees assets for five pension funds, which cater for 2.5 million people.
Demands from the Dutch regulator on investment procedures, liability measurement, and building back to an agreeable coverage ratio, have piled pressure on the country’s pensions. Several have had to reduce benefits to pensioners or raise contributions from employers and members to try and maintain – or hit – a high-water mark.
Should a deal be reached, it would potentially see two of aiCIO‘s Forty Under Forty sharing an office. Click here to read our profile of A&O Services’ Evalinde Eelens and here to learn more about PGGM’s Chris Limbach.
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