SWEDEN - Swedish insurance group Folksam has set up the first bespoke property pooling structure designed for separate pension funds within the same group.
AIPP Folksam Global, a Luxembourg-registered property fund of funds set up with Aberdeen Property Investors, will be open to four investors - all subsidiaries of the insurer in different European markets.
"Most funds demand a minimum investment of €1m. If you pool 5-10 pension funds, you create the necessary minimum," said Lars Graneld, head of separate accounts at Aberdeen.
Under the agreement, Folksam, which has €850m invested in real estate,
will have more influence over investment decisions "though not full discretion", he added.
However, he denied the co-management of the vehicle would slow down decision-making.
"We'll keep them well-informed," he said. "They could, in theory, say no to an investment because they'll have the final say - a veto, if you want to put it like that - but it's unlikely.
"For the client, it's an attractive proposition because they have some control but we do the work. They rely on us to source the investments and do the due diligence, but they're happy to have a veto because there's more money involved," he added.
The vehicle will have two sub-funds dedicated to Asian and European property, respectively, with a total investment of €100m. The fund manager intends to invest in a fund for each sub-fund each quarter towards a target of 10-12 funds in each region at the end of a three-year period.
Aberdeen earlier this year launched two bespoke funds, each worth €250m, for AP3, the €21.2bn third Swedish buffer fund.
However, this is the first time the fund manager has established a separate Luxembourg structure that enables investment from companies operating in different markets.
This structure offers a model for multinationals with separate pension plans in multiple markets, according to Esbjörn Wincent, head of alternative investments at Folksam.
Wincent said the deal was the result of "long cooperation" with the fund manager. It was among the lead investors in Aberdeen's European fund, launched in 2003, with a contribution of €625m. It invested a further €600m to an Asian property fund of funds that closed in August this year.
"The question was, what's the next step?" said Wincent. "We could have opted for another fund of funds - perhaps in US property - but instead we thought we could do something for the group."