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French Pension Fund Looks To Expand Investment Universe

March 16, 2016
Originally published in Global Finance Magazine

In today’s low-yield environment, institutional investors’ quest for higher investment returns has taken on new meaning.

So when the French government relaxed the rules as to what pension funds could invest in, ERAFP, the French civil service supplementary pension scheme—one of the world’s largest public pension funds—leaped at the chance to diversify its portfolio of investments. ERAFP has 4.5 million beneficiaries and contributions of more than €1.6 billion ($1.8 billion) per annum.

The French reforms, implemented last year, lifted some restrictions on the fund’s ability to invest directly in nonbond products. ERAFP is now looking to expand its investment universe into private equity and infrastructure assets. Announcing its decision, ERAFP said it is committing €200 million to “support the growth, expansion and business transmission projects of unlisted European SMEs [small and midsize enterprises] and mid-tier companies.”

An additional €150 million will go to “equity, quasi-equity and debt of project companies whose purpose may be in particular the funding, refinancing, building, operation, operational management maintenance, restructuring and upgrading of critical infrastructure” within OECD countries.

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