RIJSWIJK, Netherlands — A pending combination of MN Services and Pensioenfonds Metalektro is the latest sign of how the outsourcing business for Dutch pension funds is rapidly heating up.
It also means that a smaller number of players will be calling the shots in picking external managers to run Dutch pension assets. Because of their size, those players will also be able to demand lower fees from money managers, placing pressure on managers' profits.
The deal would increase Rijswijk-based MN Services' assets under management to more than €50 billion ($64.6 billion) and would make it the country's largest provider of outsourced pension services, known locally as fiduciary management.
Recent legislation that tightened pension funding rules has been the catalyst to push many funds, regardless of size, to outsource — to third parties — asset management, asset liability studies, strategic decision-making and benefit administration, said Frits Bosch, director at independent consultant Bureau Bosch, Neunen, Netherlands.
MN Services manages €35.7 billion for nine pension fund clients, including BPMT, the pension fund for metalworkers, said MN Services spokesman Geert Jan Cath. The Metalektro fund, also known as PME, has €20.5 billion in assets.
"In the current environment, scale is something of a necessity for fiduciary management," said Marko Van Bergen, managing director at Barclays Global Investors, Amsterdam. He said an increasing number of the biggest pension plans in the market — BGI's core base — already use fiduciary managers, and BGI already has a number of multimanager platforms as clients.
The talks between MN Services and PME are taking place as the Dutch outsourcing market is consolidating. Earlier this month, ING Group, Amsterdam, announced it was buying local pension fiduciary manager AZL, Heerlen. George Moller, chief executive of Rotterdam-based Robeco Group, unveiled plans earlier this month for acquisitions to build a fiduciary management platform.
Meanwhile, health-care insurer CZ, Tilburg, this month appointed Goldman Sachs Asset Management to a fiduciary management mandate for €700 million, about half its assets.
Talks between MN Services and PME will likely be completed in the next few months, said PME spokesman Bram van Els. The deal was due to close in December but has been delayed by further talks with trade unions and employers, he said.
If PME outsources money management to MN Services, the pension fund would buy a stake in the firm.
Mr. Bosch welcomed ING's €65 million purchase of AZL, saying it would give ING more prominence in a market where it was previously underrepresented. ING gains about €2.5 billion in equity assets, and expanding into fiduciary management and gaining AZL's platform also gives the firm another line of business.
Understanding local rules has given Dutch managers the edge over foreign firms in the fiduciary management market, Mr. Bosch said. Local firms such as Interpolis Pensionen Vermogensbeheer, Tilburg, with €31.4 billion in assets, and Cordares, Amsterdam, with €23 billion in assets, are the leading players..