GRONINGEN, The Netherlands -- Stichting Bedrijfspensioenfonds KPN will split its nearly 13 billion guilder ($6.5 billion) pension fund in two.
The split stems from parent company Koninklijke PTT Nederland NV's own division June 26 into KPN Telecom and TNT Post Groep, the combination of the Dutch postal service and Australian courier firm TNT, purchased in late 1996.
The combined value of the two stocks shot up nearly 30% after the split was announced, only to slip toward pre-splitup values after American Telephone & Telegraph and British Telecommunications PLC announced their joint venture to provide international phone services.
The upshot for the fund is that assets and liabilities also will have to be divided. Even though the telecoms operator was valued at two-thirds of the company's total equity, assets will be split roughly evenly, given the preponderance of postal workers.
New boards of trustees have been established for the new funds, which then will have to determine their own policies by the end of the year. There is a potential for diverging attitudes toward risk, and hence differing asset allocations, said Jan Willem Baan, director of investments of KPN Pensioen, the internal investment arm.
The fund's current target mix is 53% equities, 40% fixed-income and 7% real estate. Last October, the target equity allocation had been raised by 10 percentage points, while the fixed-income target dropped by the same amount. All of the firm's equity assets are outsourced, while 90% of fixed-income assets are managed internally.
However, any differences in opinion on investment matters might be tempered because the two boards will rely on a common investment committee, chaired by Jacob van Duyn, who also is chief investment officer-investments at Rotterdam-based Robeco Groep and a lecturer at the Free University of Amsterdam.
What's more, both funds will continue using KPN Pensioen as the common in-house manager. The 98-person unit, which includes 11 investment professionals, was set up as a limited company Aug. 1 and renamed TPG-KPN Pensioen BV.
"We have to restructure ourselves," Mr. Baan said. Instead of one set of reports and meetings, the unit now will have to serve two masters.
The manager has had the benefit of advice from board member Ralph Quartano, a former chairman of PosTel Investment Management Ltd. (now known as Hermes Pensions Management Ltd.), manager of the British Telecommunications PLC and British Post Office schemes. PosTel was formed under similar circumstances in 1983, when British Telecommunications PLC was spun off from the British Post Office and privatized.
TPG-KPN Pensioen will not be seeking money management business from other Dutch pension funds. The trustees discussed that issue and decided they prefer the manager works exclusively for the two funds, Mr. Baan said.
