FOCUS How FOPEN took its first steps in private markets Marco Lega, Managing Director of We did not want someone who was just a fund FOPEN, the pension scheme for 150 compa- selector. Ardian had the range of activities that nies including Enel, looks back at becoming we were looking for and they were very com- the first Italian scheme to invest in private petitive against the other managers that tendered. markets through a customized solution But as well as those factors, I felt they made a (IMA-Investment Management Agreement). real effort to understand what we wanted and When, in late 2019, we appointed Ardian put together a program that would work for us. to manage our first allocation to private markets, Our major goals for this allocation are we were like a pioneer for Italian pension diversification and yield enhancement because schemes. The law change that made this easier the expected returns available from public to achieve happened in late 2014 and for the first markets are so low. We’re very long-term few years we studied the market with our advisor, investors so the illiquidity of private equity is not meeting asset managers and learning about the an issue for us. We can be patient and benefit different asset classes. We decided that we want- from the illiquidity premium in private markets. ed to make our first commitment in private equity The rules for Italian pension schemes re- because it is by far the biggest and most mature quire us to leave all investment decisions to the market. We are interested in other assets such as manager within the guidelines we set out at the private debt and infrastructure but private equity start, so we do not get involved in each invest- was the obvious place for us to begin. ment decision although we obviously want to be Then, the board of FOPEN launched a informed in order to monitor properly. Ardian ac- tender to select a manager for a commitment of tively provides us with insights, not only through about €115 million, which was around 5% of our the usual reporting, but also for example through assets at that time. The money will be invested periodic updates on their investment pipeline and mainly in European private equity but we have by sharing due diligence memoranda after in- the flexibility to put up to 10% in private debt vestments close. All this helps us to increase our and real estate. knowledge of private markets. Obviously, becoming the first Italian We’re now on a journey that I think will pension fund to go through this process and make end with us having 15% of our assets invested a sizeable commitment meant a lot of people in private markets, which is the average among were watching us. It was particularly important our European peers. Since we started working to us to appoint a major European player with a with Ardian, a lot of other Italian funds have well-recognized name. The other priority was to started using customized solutions to invest in work with someone that managed funds directly private markets. We opened the way for others across several asset classes and that also pro- to follow. vided managed solutions using third-party funds. 2020 ACTIVITY REPORT 47