Executing The 5-Year Plan

PFA Pension

Section 1 of 10

PFA’s goal was to increase allocations from 2% to 15% within five years.

For private equity, this is a dramatic increase in a very short period of time. To do this, PFA needed a plan.
Section 2 of 10

Which of the following strategies will be most important in getting PFA to the 15% allocation?

  • Which of the following strategies will be most important in getting PFA to the 15% allocation?
Section 3 of 10
Section 4 of 10
Section 4 of 10
You can see that scaling up presence in the alternative space, especially if you try to keep costs low and cash flow profile relatively smooth, is difficult. It is even harder to become a successful direct investor! One potential strategy, Henrik notes, is for PFA to become a co-investor.
Section 5 of 10

Why do you think that GPs would allow (or encourage) their LPs to co-invest alongside them?

Peer responses

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Co-investment allows GPs to share risks, access more asset classes and investment opportunities while benefiting from the pension fund network

M, France

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1) Less fundraising effort required / opportunity to raise more capital 2) Established relationships and trust 3) Understanding/alignment of the company and Investment strategy

E, Abu Dhabi

" "

Yes I think GP would encourage for co-investment opportunities, because this shows the alignment of the interest the the GP and LP, it also gives GP the confidence that this is a good investment decision. Together the GP and LP represents a larger ownership of the target company, and will have more power influencing the company operations.

Y, Canada

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Capital aid and diversification!

J, United States

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They may need the capital for certain deals, and it may de-risk the investment for them in certain ways.

S, United States

Section 6 of 10
Section 7 of 10

Do you think co-investing is worth the trade?

  • PFA Pensions - Poll 3
Section 8 of 10
Section 9 of 10
Section 9 of 10

In 2020, the Strategy 2020 program came to an end, and PFA needed to articulate a new strategy for the next three to five years. The result was Commercial Responsibility 2023. This new strategy articulated three new goals:

  1. Be the best at generating sustainable returns
  2. Have the highest customer loyalty in the market
  3. Have a solid foundation and profitable growth

Compare the goals of the updated strategy with those of Strategy 2020:

  1. Focus on risk-adjusted return
  2. Find new sources of investment return
  3. Expand investment areas
Section 10 of 10

How do you think the new strategy reflects the triumphs and challenges of Strategy 2020?

Peer responses

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PFA has successfully deployed their capital in the alternative space and expanded the network there, so now the investments are expected to generate returns. However, generating sustainable returns requires a well diversified and customized portfolio that can provide return constantly, so the challenge would be keep find good investment opportunities that fit the time horizon.

Y, Canada

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It seems like a natural extension of the success of the previous strategy.

S, United States

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The 2020 strategy has fully achieved its objectives. The second step, with this new Commercial Responsibility 2023 plan, aims to capitalize on the results obtained by gaining customer loyalty and to perpetuate the results obtained over the long term.

M, France

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Triumphs - seems that their efforts to expand investment areas and find new sources of investment return may have been successful and now the focus is to sustain that. Challenges - it seems that they may struggle with short term expectations of their customers (3-5 years) relative to their longer term alternative investment strategy so by focusing on customer loyalty and foundational portfolio, they will be able to retain capital and achieve returns over the longer term time horizon

E, Abu Dhabi

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Strategy 2020 was all about finding returns and diversification. Commercial Responsibility 2023 is geared to retention, loyalty, and sustainability. In order to be an industry leader, you need to have a solid foundation and a plan to execute in place. Retention and customer loyalty are aiding factors.

J, United States