GERMANY – Industry sources say Deutsche Asset Management and HSBC’s Trinkhaus Capital Management may be in line to advise chemicals firm Henkel on its planned contractual trust arrangement – an external fund to finance more than €1bn in pension liabilities.

The sources spoke on the condition of strict anonymity. Neither DeAM nor Trinkaus could be reached for further comment.

Last month, Henkel announced that it would build a CTA for its pension liabilities and issue a hybrid bond to raise the necessary liquidity for it. At the end of September, Henkel’s on-balance sheet pension liabilities totalled €1.8bn.

Henkel has since completed the bond issuance, which raised €1.3bn in new capital for the CTA. The main bookrunners for the sale of the bond, which mixes debt with shareholder equity, were BNP Paribas, Deutsche Bank, Citigroup, HSBC and Dresdner Bank. The legal preparations for the CTA, known as Henkel Trust e.V., also are done.

Dirk Neubauer, a spokesman for Henkel in Düsseldorf, told IPE that by Christmas, the firm could award the mandate to steer the CTA to one of two banks. For the mandate, Neubauer said Henkel was limiting itself to the group of banks involved with the sale of the hybrid bond.

“However, since we are very deliberate organisation, we might need more time than before Christmas to decide,” he added.

DeAM said late last month that Germany’s CTA market would total at least €15bn in 2006, adding that it was actively bidding for mandates in this booming market. DeAM is already running a €5bn CTA for its parent Deutsche.

Trinkaus acted as consultant and asset manager for the €4.3bn CTA created by German airline Lufthansa in June 2004.

Other factors in Trinkaus’ favour include its ownership of INKA, a leading provider of master funds, and the fact that like Henkel, it is based in Düsseldorf.

Neubauer said that once a consultant for the CTA was chosen, Henkel would have a new asset-liability study drawn up. The results of this study would then form the basis of an asset manager search in the spring of 2006, he said.

Generally speaking, Henkel’s CTA aims to invest 60-70% in fixed income, 20-30% in equities and the rest in alternatives, including real estate, hedge funds and commodities.

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