The €1.2 billion CIÉ pension fund - one of the biggest occupational schemes in the State and currently managed exclusively by AIB Investment Managers (AIBIM) - is to be divided three ways between Bank of Ireland Asset Management (BIAM), Irish Life Investment Managers (ILIM) and the American investment group Capital International.
By Brendan McGrath,
Markets Editor
The loss of the CIÉ fund is a major blow for AIBIM, which has managed the fund in its entirety for the past five years. Likewise, it is a major boost for BIAM and ILIM, both of whom will be managing €400 million of CIÉ funds.
It is also thought to be one of the first occasions that a major portion of a State occupational scheme has been allocated to an overseas fund manager. It is understood that CIÉ received 27 applications for the mandates with strong interest from overseas fund managers.
A spokesman for CIÉ was at pains to emphasise that AIBIM's loss of the investment had nothing to do with the recent revelations of $691 million (€788 million) losses at AIB's Allfirst subsidiary in the US and stated that the decision to divide the fund and allocate it to three new managers was taken purely on investment grounds and after an extensive evaluation process.
It is understood that Irish Life's portion of the fund will be passively managed through its consensus fund, while both BIAM and Capital will actively manage their €400 million portions of the fund. Both BIAM and Capital operate value-driven investment strategies.
The emergence of Capital as a significant player in the Irish market could also have repercussions for the Irish stock market. While Irish pension funds have about 18 per cent of their assets invested in Irish equities, the Irish market's weighting within the euro zone is little more than 2 per cent.
Market sources believe that Capital may see little reason to have 18 per cent of its CIÉ assets tied up in Irish equities and may spread its portfolio more widely. This could result in a sizeable overhang on the Irish market if Capital decides to substantially reduce its Irish equity weighting.
