Italian industry-wide pension funds team up for private debt investment

A consortium of four Italian industry-wide defined contribution (DC) pension funds has launched a search for a private debt manager.

The initiative, called Progetto Zefiro (Project Zephyr), is the first time Italian industry-wide DC funds, collectively known as ‘fondi negoziali’, form a group to invest in private debt. 

The four funds have committed €195m in total, from Fondo Gomma Plastica, the fund for employees of the rubber and plastics industry, Fopen, the fund for employees of energy group ENEL,  Pegaso, the fund for the utilities sector, Previmoda, the fund for the fashion and textile sector. 

The effort follows an earlier initiative, Progetto Iride (Project Iris), which saw a consortium of fondi negoziali pool their assets to invest in private equity for the first time in 2019.

Under the new initiative the funds seek to focus on corporate direct lending, mainly senior secured and/or unitranche, with limited scope for other categories.

The assets will be domiciled mainly in the European Economic Area, but investment in the US will be admitted to a degree, for diversification reasons. The funds will look to invest part of the assets in the Italian economy.

The funds are being assisted by Milan-based consultancy European Investment Consulting and expect to finalise the selection process by March next year, with a view to activating the mandates during the second half of 2021.

A statement by the consortium said the funds launched the project to diversify their asset allocation and sources of return, as well as to maximise their yield prospects in the context of the low-yield environment.

The consortium expects that by pooling assets each fund will get access to a greater range of funds and underlying investments and take advantage of economies of scale, both during the selection process and after the launch of the mandate.

In the earlier private equity collaboration, Project Iris, Neuberger Berman was appointed in March 2019 to manage a fund-of-funds worth €216m. The five-fund consortium, which included Foncer and Fondenergia as well as Fondo Gomma Plastica, Pegaso and Previmoda, was assisted by Prometeia Advisor Sim.

Both initiatives predate the COVID-19 crisis, as Italian pension funds have been looking to grow their participation in the domestic economy.

In 2020, in an unrelated effort, the association of fondi negoziali, Assofondipensione, launched a series of fund-of-funds vehicles in partnership with Cassa Depositi e Prestiti (CDP), the partly state-owned investment bank. The funds will seek to invest in domestic infrastructure, private equity and private debt assets.

Source: IPE