Publica, one of Switzerland’s largest pension fund with assets of CHF44bn (Є43.9bn), is looking for asset managers to invest in real estate equity in Canada and in the US, following the decision to increase its international allocation to the asset class.
The pension fund plans to invest CAD150-300m in core/core+ open-ended real estate equity in Canada, and $400-500m in the same asset class in the US.
“We believe real estate equity brings attractive diversification benefits for the overall portfolio, which allows us to optimise the risk/return profile of the portfolio as a whole,” Dominique Gilgen, head of private markets at Publica, told IPE.
Publica also believes international real estate equity investments, particularly in the core space, should improve the stability of its investment portfolio overall, while capturing the liquidity premium.
“Furthermore, in the current inflationary environment, we believe real assets such as real estate, but also infrastructure, should perform better than nominal asset classes, as they are expected to benefit at least partially from an inflation protection and therefore deliver real returns,” he added.
The tender notice, which was posted via IPE Quest, requires participating managers to have a minimum total assets worth CHF5bn in global real estate core, core+ and value add strategies, and total assets under management (AUM) of CHF15bn to invest in Canada.
It is also searching for managers with a minimum CHF5bn assets in the asset class and CHF20bn total AUM to invest in the US.
Publica has been investing in international real estate and core open-ended real estate equity funds since 2017, to built a diversified portfolio across sectors and regions.
“We invest 50% in North America, 30% in Europe, 20% in APAC (Asia Pacific region). With the increase of the international real estate allocation, we decided to add Canada as a further market complementing the US portfolio in North America,” Gilgen said.
Canada not only brings further diversification to Publica’s portfolio, but it is also a large and well-institutionalised real estate market for core investments, he added.
Publica has decided last year to increase allocations to international real estate to 9%, from 6% planned under the previous investment strategy.
It has reduced its fixed income allocation from 58% to 44% boosting public equity investments by 5%, from 27% to 32%, and the remainder 9% went to real assets, including 5% in real estate – split 2% in Swiss and 3% in international real estate – 3% into a new asset class private equity infrastructure, and 1% in precious metals, increasing the allocation to 3%.
The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email jayna.vishram@ipe-quest.com.
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