Even in the field of sustainable finance, the gloves sometimes come off, as research by finews.ch shows. Fund companies are fighting in federal court over the management of the state development finance company Sifem.

The Swiss government put out a unique tender last November for a management mandate: a portfolio of impact and microfinance investments worth over 800 million Swiss francs ($832 million), which the Swiss Investment Fund for Emerging Markets (Sifem) uses to fight poverty in more than 70 developing and emerging countries.

The management mandate, which requires a high degree of specialized knowledge, is also a lucrative one. Starting in September of this year and scheduled to run until the end of 2027 with an optional extension to 2032,  Sifem will pay a total of more than 64 million francs. Sifem falls under the umbrella of the State Secretariat for Economic Affairs (Seco).

Die Not Yet Cast

All the big players on the impact scene have applied for the mandate, which has been held since 2011 by the small Bern-based asset manager Obviam. Today, in connection with the impact-firm Asteria Investment Managers, it belongs to the Swiss-Italian financial group Reyl Intesa Sanpaolo.

The die seemed to be cast when Sifem announced in February that Zurich-based microfinance specialist Responsability, a subsidiary of British fund house M&G, had won the bid.

Spanner in the Works

But that is not a done deal. With the mandate of Obviam officially expiring on August 31, it does not look as if Responsability will be able to take over management of the Sifem portfolio at the beginning of September as scheduled. Several fund companies have filed a complaint against the award in federal court.

This development was confirmed by Joerg Frieden, President of Sifem, upon request. While Swiss the Federal Court has not yet commented on the complaints, it did allow Sifem to conclude a temporary contract with Obviam to manage the portfolio until the end of February, according to Frieden.

Complaint Filed

As research by finews.com has shown, the complainants are Asteria Investment Managers and Obviam, and the impact fund company Blue Orchard, which is also domiciled in Zurich. The latter has been operating as a subsidiary of British fund giant Schroders since 2019.

Sifem, Responsability, and Blue Orchard declined to comment on the complaint and its content. Reyl Intesa Sanpaolo for its part said that Asteria Investment Managers and Obviam have taken note of the decision of the Sifem Board of Directors and decided to appeal it.

Lion's Share is Missing

There is much at stake for Asteria Investment Managers. When Reyl subsidiary Asteria, led by well-known fund specialist Katia Coudray, entered into a strategic partnership with Bern-based Obviam at the end of 2020, it was clear that the latter would essentially manage Sifem's assets.

In this regard, the parent company Reyl Intesa Sanpaolo said: «Obviam manages funds and individual mandates for institutional and private clients. Asteria and Obviam are actively pursuing their development and their strategic plan aimed at accelerating the mobilization of capital facilitating the transition to a sustainable society.»

No Initial Takers for Smaller Mandate

While Sifem was able to award a smaller mandate worth just under 5 million francs without hindrance, for governance reasons, the federal development finance company will in the future have an independent body to review the performance of portfolio managers.

The service management mandate will be carried out by the company Tameo starting September 1.  The company is a spinoff of the Geneva-based impact investment platform Symbiotics. No one came forward for the smaller mandate in the regular public tender - which is why Sifem had to award it by private treaty.