IPE Netherlands Briefing: Dutch insurers eye more buyouts

Dutch insurers expect momentum in the struggling buyout market to pick up during the following years, with a total volume of €20-30bn in pension fund buyouts to come to market until 2027.

This expected total is still modest compared to for example the UK market where £600bn in buyouts are expected over the next 10 years. But it would still be a significant rise compared to the previous four years when a total of only a few billion euros in buyout deals was concluded.

Insurers have now set their hopes on (closed) corporate pension schemes deciding to liquidate as the 2028 deadline for a switch to defined contribution arrangements is approaching.

Against the background of the pension reform in the Netherlands, some funds are also making fiduciary changes. The pension fund of DNB, the central bank annex pension regulator, announced it has swapped BlackRock for Aegon Asset Management after 17 years with the former. Aegon AM is cheaper and is a better fit in terms of operating model, according to the DNB fund.

In other fiduciary news, the Dutch pension fund of chemicals company Dow, which is closed for new members and may not make the switch to the new DC system, also announced a change. The Dow fund, which previously managed its investments in house, appointed Neuberger Berman to oversee all its fixed income investments after it had first sold its entire portfolio of listed equities in an effort to reduce risk.

ESG progress

Pension funds and their asset managers also continued to make progress on the ESG front. Metals industry scheme PMT adapted its ESG exclusion framework to allow for more granularity. In addition to the general ESG rating of a firm, it will also take into account how companies score on 11 separate ESG topics.

Examples of the additional indicators include water management, biodiversity, the labour conditions in companies’ supply chains, the sourcing of their raw materials and waste management. If a company scores below a certain threshold on one of the indicators, it will be excluded.

The new approach means companies can no longer compensate bad scores on one sub-topic with better scores on others. At the same time, however, PMT has lowered the minimum overall ESG score that companies must achieve to enter the portfolio as it does not want its equity investments to deviate too much from the MSCI World Index.

In other ESG news, pension asset manager PGGM pledged to increase the share of women in its workforce by two percentage points as it became the first Dutch investor to sign the CFA Institute’s Diversity, Equity and Inclusion Code (DEI).

Items to note:

• The IPE Expert Forum on Private Credit will take place on Thursday 19 September at the Waldorf Astoria Amsterdam. This is an afternoon seminar for Dutch portfolio managers, investment directors and strategists from pensions, endowments and other institutional investors.

Tjibbe Hoekstra

IPE Netherlands correspondent