GERMANY – Energy giant E.ON has confirmed that it has hired an investment consultant as part of its contractual trust arrangement, which, in funding €5.4bn in pension liabilities, is one of the biggest ever created by a German firm.
E.ON said the consultant would advise the search for asset managers for equity investments made by the CTA. It added that these investments represented 10% of the CTA’s total volume.
Meanwhile, industry sources told IPE that Mercer Investment Consulting had won the mandate for E.ON’s asset manager search. Mercer and E.ON declined to comment.
E.ON’s search for asset managers means that it is entering the final stages of the construction of the CTA. Earlier this year, it commissioned three separate asset-liability studies for the CTA. The studies are crucial in establishing the external fund’s strategic asset allocation.
In April, E.ON also said it had provided half of the funding for the CTA, which is to finance up to €5.4bn in pension liabilities.
But the firm stressed that it would not be conducting searches for all of the asset classes in which the CTA would invest.
”We have no need to search for managers for bonds, for example. We can do all of that investing ourselves,” Verena Volpert, senior vice president of finance at E.ON, told IPE.
Volpert joined E.ON from German media giant Bertelsmann last October in part to oversee construction of the CTA. At Bertelsmann, Volpert was executive vice president of finance and in charge of creating that firm’s CTA, which was to fund up to €1.9bn in pension liabilities.
Based in Düsseldorf, E.ON employs just under 80,000 people worldwide. In 2005, it had pre-tax profit of €7.3bn on sales of €56.4bn.
E.ON is just one of several multi-national firms that have created a CTA amid the switch to international accounting standards among listed German companies. Under IAS, CTAs are considered an ideal way of financing pension liabilities.
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