ERAFP launches call for tender to select three SRI emerging market bond portfolio managers

Paris, 26 April 2018 – In keeping with its policy to broaden its investment universe and its SRI procedure, Établissement de Retraite additionnelle de la Fonction publique (ERAFP), France’s public sector additional pension scheme, has launched a restricted tender procedure to award mandates to manage an emerging market bond portfolio.

The three asset management companies selected for the mandates will run a non-benchmarked emerging market bond portfolio, using conviction-based management, on behalf of ERAFP. The objective will be to obtain the best possible return while minimising the risk of default, in compliance with the institution’s SRI rules for this asset class.

The portfolios will be invested mainly in “hard” currency bonds (USD, EUR, etc.) issued by private and/or quasi sovereign issuers belonging to emerging regions.

The asset management firm will have to build the portfolio chiefly on the basis of the fundamental analysis of each issuer and each bond, ensuring broad diversification and complying with ERAFP’s SRI framework.

On an indicative basis, the initial committed amounts will be around €160 million, with a target of €300 million in three years. These amounts could be revised upwards or downwards, depending on factors such as decisions made by ERAFP’s Board of Directors, ERAFP’s market forecasts and the asset manager’s performance.

The mandates’ initial length will be 5 years and could be renewed by ERAFP for two successive one-year periods. Two of the three mandates awarded will be “stand-by” mandates, which means that ERAFP reserves the right to activate them, in particular for risk spreading purposes.

The consultation file is available on www.achatpublic.com. A link to this platform is also available on RAFP’s website (www.rafp.fr).