U.K. superfund Clara-Pensions selected Kempen Capital Management as its fiduciary manager, a spokesman confirmed.
Clara was set up to bring defined benefit assets as well as liabilities of many smaller plans together to help them move to a buyout. It is the first superfund to appoint a fiduciary manager, despite awaiting approval from The Pensions Regulator to operate in the U.K. market.
Clara's model is backed by private capital provided from global investment firm Sixth Street Partners and reinsurance company Wilton Re Overseas. The capital will be used to replace the sponsor covenant when assets and liabilities of pension funds are transferred to Clara.
Kempen will implement an investment strategy on behalf of Clara and its backers.
It will develop an asset allocation for Clara and deliver a low-risk investment strategy that is expected to last up to 10 years for each of the pension funds consolidated under Clara.
Clara was assisted in the search by consultant Lane Clark & Peacock.
"We'd originally hoped that we'd announce Kempen's appointment following our completion of TPR's assessment process," the spokesman said in a telephone interview. "However, we felt it is the right time to announce Kempen's appointment, now that the formalities have been completed. This appointment means we're in a good position to progress with transactions once the assessment process with TPR is complete."
An RFP process started in late 2019. The spokesman did not provide details of other candidates, but said that Clara evaluated candidates based on factors such as fees and value for money as well as innovation and types of investments.
Clara has been waiting since last year for approval of its business model by The Pensions Regulator, which in June 2020 first gave details on how consolidators should be set up and operate in the U.K. market.
Despite appointing Kempen, Clara does not run any assets because no superfund has yet been approved by the regulator.
"The fact that (the process) has taken longer to complete the regulator's assessment process than some might have expected isn't a problem for the pipeline" of transactions, the spokesman added, noting that the firm is encouraged by interest in consolidation being driven by the needs of trustees and employers.
The firm expects to receive authorization over the coming months. "We remain on course for transactions, hopefully, this year," he said.
Buyouts will be provided by insurance companies that Clara will partner with when its model is approved.
