PBGC Puts Out Call for Asset Management Partners

August 1, 2008 (PLANSPONSOR.com) - The nation's private-sector pension insurer is looking for help in putting into place a new investment policy calling for 10% of its assets to be placed in private equity and real estate holdings.

A news release from the Pension Benefit Guaranty Corporation (PBGC) announced the agency had released a request for proposal (RFP) to form strategic partnerships with outside firms to help implement the new policy adopted by its Board earlier this year.

According to the announcement, about $5.5 billion is to be dedicated to private equity and real estate investments.  Under the current RFP, the PBGC said it seeks two to three firms to manage $2 billion to $2.5 billion in these asset classes. 

The successful firms must have global operations and must have successfully managed private equity or real estate allocations, as well as at least $1 billion in strategic partnerships within the past three years.  The official solicitation, including full details on the services required and instructions for submitting proposals, appears on the U.S. Government’s FedBizOps centralized procurement Web site:  www.fbo.gov .  

“As our investment portfolio has become increasingly diversified, we are using more sophisticated techniques to mitigate risk and safely enhance returns” said PBGC Director Charles E.F. Millard, in the statement. “By entering into strategic partnerships with firms that have top-tier expertise in alternative investment classes, we seek to build capacity to better oversee our portfolio. PBGC already has a deep bench of experienced money managers and financial advisers, and we expect the firms selected under this RFP to beef up our roster of talent. We also seek the deep consultative dialogue and other services that world-class firms can provide in strategic partnership.” 

Through the strategic partnerships, the PBGC will leverage the entire array of financial, quantitative and qualitative resources of each firm including asset management, consolidated performance reporting, risk mitigation, staff training, and other resources that bidders may propose, the PBCG said.

To assist in developing the RFP and evaluating proposals, the PBGC has hired EnnisKnupp + Associates of Chicago, which advises clients, including the Teacher Retirement System of Texas, on strategic partnerships.