Month: September 2020
However, it is currently owned by more than 180 separate banks, which sometimes also operate as customers and competitors to the firm.“To remain competitive, Nets needs clear governance and streamlined decision-making with a commitment to make necessary investments,” the new owners said.The Danish fund’s chief executive, Carsten Stendevad, said the “significant investment” would create value for its 4.8m members.“We see a compelling investment opportunity to transform Nets from a strong Nordic company into a Northern European leader within the payments industry, headquartered in Denmark,” he said.Nets chairman Peter Lybecker said the takeover from the three parties came as a result of an extensive review on its strategic options.“Nets needed a new owner with the expertise, commitment and financial resources to develop the business,” he said.“The overriding focus for the Nets board has been to select the best owner, out of many interested parties, with a clear understanding of the role Nets plays in society.”Under the new ownership structure, there will be a change in board membership.European nationals from ATP, and both private equity houses, along with independent and employee representatives, will take control once the deal receives regulatory approval later this year.This is the second joint venture seen from ATP this year, after it partnered PFA in a DKK3bn deal to fund state enterprise DONG Energy. ATP has entered into a joint venture with two other parties in the DKK17bn (€2.3bn) purchase of Danish firm Nets, a specialist financial transaction provider, in an all-cash arrangement.Private equity houses Advent International and Bain Capital will join the fund, as both add another business to expanding Nordic portfolios.The DKK593bn fund said the significant financial commitments made by it, as well as the private equity partners, will see a change in the composition of the company’s board, and removes the “sub-optimal” ownership structure currently in place.Nets, which is headquartered in Denmark, currently employs 2,600 people across the Nordic region and Estonia.
Holding property directly has enabled two German pension funds to maintain a relatively high exposure to equities, according to their head of planning and controlling.The Zusatzversorgungskasse Rheinland-Westfalen (KZVK) and the Gemeinsamen Versorgungskasse für Pfarrer und Kirchenbeamte (VKPB) invest 6.75% of their $8bn (€5.9bn) in assets in direct real estate.Peter-Henrik Blum-Barth said this was one of the reasons the pension funds could “afford” a 25% equities exposure.The “hidden reserves” built from the steady cash-flow from these investments “helps to increase risk-bearing capacity”, he said. “Because of its predictable cash-flow, the illiquidity premium from the direct real estate investments does not strain the economic risk budget of a pension fund,” he added.He stressed that other factors, including regulatory ones and the structure of liabilities and guarantees, also had to be taken into account.Wolfram Gerdes, managing director for investments, added: “Direct investments clearly have priority over real estate funds, as they allow us to retain more added-value in-house.”He said fund investments were made in “particularly promising” niches, but, for new investments, directly held properties were “clearly preferred”.Gerdes also pointed out that, “as soon as you have your own infrastructure” to make such direct investments and manage them, a pension fund could “achieve effects of scale”.The pension funds prefer properties “within our area of business” – mainly the German province of North Rhine-Westphalia and surroundings.“Traditionally, we are not only investing in metropolises when we see an attractive risk/return relation but also in medium-sized urban centres,” Gerdes said.He added that, in those cities, there was “less competition” from international investors.
Van Vledder said F&C’s proposals for improving strategic advice convinced Architectenbureaus it was the right partner, adding that, of the 24 potential candidates, three had been invited to tender for the contract.The contract will run for an indefinite period, but the scheme’s intention is to stay with F&C for 3-5 years.Van Vledder said Avida International acted as adviser during the tendering process.To further improve the board’s countervailing power, it has also appointed Triple A Risk Finance as additional adviser for asset-liability management.Willem Jan Boot, the pension fund’s chairman, said: “Among our targets were a proper insight into risks and management of risks, as well as limiting our dependence on parties we have contracted out our asset management.”Ben Kramer, CFO at F&C’s Netherlands, added: “The current economic climate has triggered a growing interest among institutional investors for an engaged partner that pro-actively advises the board and is critical if necessary. “Following the appointment of F&C as fiduciary manager, the pension fund’s board can now focus on essential issues, such as strategy and risk management.”F&C – recently taken over by the Bank of Montreal (BMO) Global Asset Management – has €100bn in assets under management.Its fiduciary proposition comprises advice, asset-liability management, asset allocation, derivatives management, the selection of institutional managers and advice on socially responsible investment. The pension fund has 7,065 active participants, 26,885 deferred members and 11,970 pensioners affiliated with more than 1,800 companies.Architectenbureaus, which had to cut pension rights by 2.8% last year, reported a coverage ratio of 109.4% at July-end.As a result of a decline in its sector, the number of active participants fell by 19% last year, and the board has indicated that it was expecting a further decrease in 2014. Architectenbureaus, the Dutch pension fund for architectural staff, has appointed F&C Netherlands as fiduciary manager for €3.2bn of its €3.5bn in assets. The scheme wanted to improve its asset management by separating fiduciary management from asset management and reporting and control, according to trustee Roeland van Vledder.He added that general asset management – and the management of Architectenbureaus’ 10% property allocation – would remain with PGGM and Syntrus Achmea Real Estate, respectively.“We wanted to separate the advisory role from the asset manager, by mandating F&C with strategic advice, hedging policy, the management of balance risk and monitoring the asset manager,” said Van Vledder, who is also chairman of the pension fund’s investment committee.
Earlier this year, the PIP, co-created with the Pension Protection Fund (PPF), suffered a significant setback when three of the 10 founding investing pension funds left the initiative, citing cost and return issues.The remaining seven investors each made soft commitments of £100m, of which more than £200m has already been invested by sole investment manager Dalmore Capital.The PIP’s creation was beset by delays but will now run on a not-for-profit basis and expects to provide pension funds with access to infrastructure projects for fees around 50 basis points.Weston’s appointment was praised by Chris Hitchen, chief executive at £18bn founding investor Railpen.“This appointment is great news for the PIP, its founding investors and all future investors,” he said. “Mike’s expertise and focus will enable PIP to fulfil our vision.”Joanne Segars, chief executive at the NAPF, said: “This is exactly the right time to appoint a chief executive, and Mike’s experience in leading pension scheme investments, including extensive investment in infrastructure, makes him ideally suited to this role.”The PIP’s creation was backed by the central government.Earlier this year, senior Treasury minister Danny Alexander called on pensions to invest more in national infrastructure, praising the PIP for its progress to date. The UK’s National Association of Pension Funds (NAPF) has appointed industry veteran Mike Weston as chief executive of its Pensions Infrastructure Platform (PIP), shortly after his departure from the £2bn (£2.5bn) Daily Mail General Trust (DMGT).Weston was previously in-house CIO at DMGT, responsible for strategy and performance of investments for the newspaper-house’s pension funds.He joins the PIP with immediate effect after leaving DMGT – where he was in charge of investments for five years – earlier this year.In his role at the PIP, Weston will be responsible for developing an investment programme, building an internal team and increasing the fund’s investor base to help reach the target size of £2bn.
The investor said the product should be in a UCITS format or non-UCITS AIF, in addition to being investable via a German Spezial AIF.Knowledge of German Spezial AIFs would be an advantage.Liquidity should be at least monthly – daily or weekly is preferred – and the product should be euro denominated.The target return will be three months Euribor plus 4-6% per annum, while the target volatility will be 3-7%.Applicants must have a minimum of €500m in assets under management (AUM) for the mandate itself and €5bn in AUM as a company.The client also requires a track record of at least three years, preferably five.Interested parties should state performance, net of fees, to the end of 2014.The deadline for applications is 18 February.The IPE news team is unable to answer any further questions about IPE-Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email [email protected] An undisclosed corporate pension fund in Germany has tendered a €100m liquid alternative strategies mandate using IPE-Quest.According to search QN1488, the client is looking for a multi-strategy fund (single or multi-manager) that is absolute return-orientated and uses liquid alternative strategies.The product should be broadly diversified over strategies and/or asset classes and/or countries/regions.The correlation of the asset manager’s offering to equity markets and the euro bond market should be low, according to the search.
Courts in the US and Canada have ruled that the underfunded UK pension fund for Nortel is entitled to a share of $7.3bn (€6.4bn) in residual assets, six years after the Canadian telecoms firm collapsed.The ruling, passed down jointly by the Delaware Bankruptcy Court in the US and the Supreme Court of Ontario, saw both judges accept the argument put forward by the trustee of the UK pension fund that assets should be divided on a pro rata basis.The ruling brings to a close a protracted dispute that began in 2010 when the UK Pensions Regulator lodged a claim for up to £2.1bn (€2.9bn) to resolve the deficit in the UK fund.John Tillman, lead insolvency partner on the cross-border case, said he was delighted both judges had accepted the call for a pro rata approach put forward by the UK trustee. “Our objective throughout has been to try to ensure the 33,000 remaining members of the UK pension scheme receive a fair share of the proceeds that are to be distributed from the worldwide insolvency process,” he said. Consultancy PwC speculated that the ruling in favour of a pro rata approach could see a precedent set for future international insolvencies.Jonathon Land, pensions partner at PwC, argued that the ruling saw pensioners “treated fairly”.“Despite opposition from the bondholders who were looking to receive interest on their original claim, we are pleased to see the judges in both Canada and the US ruled that our approach to allocation was the most appropriate.”The ruling comes six months after Nortel’s trustees secured £340m to fund the deficit in a case supported by the Pension Protection Fund.
He urged whichever party that comes into power following the vote – which has seen predictions of a minority government, as no party was polling above 28% of the vote – to take action early.“It is one of those issues that probably needs a decision early in the government because the closer you get to the end of a government term, the less likely people are to do that big, fundamental change,” he said. Moriarty said there would be a significant lead-in time before any such system got underway, predicting up to three years before underpinning regulation was even finalised.In addition to both current government parties, Fianna Fáil, polling behind Fine Gael at 21% but ahead of Labour, pledged its support for a universal pension system based on automatic enrolment.Labour’s manifesto appears to support a system whereby pension pots would follow workers, backing a system whereby savings would “follow [workers] through their working life if and when they change jobs”.The party also highlighted the benefits of scale that would come with the rollout of a universal system.“[Auto-enrolment] will have a transformative effect on pension coverage over time, not only driving up pension coverage but driving down costly administration charges associated with individual pension plans currently,” its manifesto said.For its part, Fine Gael said it would push for the introduction of a national pension tracking service – potentially distinct from the system advocated by Labour that could see pots follow members.It said it would seek to attract emigrants home by supporting the development of a European tracking service, a likely reference to the so-called TTYPE project under development by a number of Continental pension providers.The matter of housing was also touched on by several of the parties, with Fianna Fáil proposing that investments in affordable housing could be incentivised by including such investments in a list of assets Irish defined benefit funds could use to offset a 10% risk reserve requirement.“There are a lot of characteristics of social housing that would make sense for pension funds,” Moriarty said, “but I do worry there is almost this pressure on pension funds to invest in certain assets.“At the end of the day, trustees are going to have to make a decision as to whether it’s an appropriate investment for their fund or not.” Ireland’s next government must make a decision on pension reform early in its term to avoid its rollout being delayed further, the Irish Association of Pension Funds has urged.The end of the current parliamentary term has seen little concrete detail or action on the rollout of automatic enrolment to boost pension coverage, despite the Fine Gael/Labour coalition’s previously commissioning a report on reform for the end of last year, and pledging reform as part of the 2011 coalition agreement.The cross-departmental Universal Retirement Savings Group (URSG) will now report within the first six months of the next parliamentary term, Fine Gael pledged if it won today’s election.Jerry Moriarty, chief executive of the IAPF, speculated that, because the URSG was initially set to report by the end of last year, the timeline laid out by Fine Gael implied there was still much work to be done.
SPF, the €14bn pension fund for railways in the Netherlands, and SPOV, the €3.4bn pension fund for public transport, have confirmed they are to merge next year.SPOV said in its 2015 annual report that had become increasingly difficult to find board members in the sector.It also cited increasing costs, complexity and legal requirements. SPOV said it was large enough to remain independent but that growth was essential to manage the scheme efficiently. Both pension funds are assessing how pension arrangements can be matched and the funding gap bridged, according to Jan Heilig, vice-chair at SPOV.As of the end of April, SPOV’s coverage was 102%, while funding at SPF stood at 104%.A spokesman for SPF Beheer – owned by SPF and the provider for both schemes – added that a merger could also be a tax benefit for SPOV.SPF, being the owner, does not have to pay tax to SPF Beheer. This benefit could also apply to SPOV’s participants after a merger, he said.SPOV said the alternatives to a merger would include carrying on independently while extending its scope to public transport in the larger cities in the Netherlands, or merging with Vervoer, the €19bn sector scheme for private road transport.In its annual report, SPOV’s accountability body (VO) noted that the public transport scheme’s costs were 20% above average, due in part to SPF Beheer’s relatively limited scale.SPOV’s VO also indicated that the quality of pensions-administration data at SPF Beheer was not up to scratch and that correcting the problems had required an externally checked and monitored action plan, although the scheme’s board said the problems had been resolved and that any errors had been corrected in favour of participants – albeit not retroactively.The VO said a self-assessment on data security had revealed 33 areas for improvement, with SPF Beheer also falling short of the respective supervisory norms for 16 out of 54 management measures.It also noted that SPF Beheer’s entire executive board had been replaced within a year, with its chief executive Albert Akkerman retiring, CFRO Saskia Slijboom moving to insurer ASR and CIO Marcel Andringa leaving for metal scheme PME.They have been succeeded by Edwin Kreikamp (ASR), Martin Mos (A&O) and Justus van Halewijn (Achmea), respectively.
Companies with the weakest ESG credentials, as captured in low QESG scores, tended to trade with the widest CDS spreads, Hermes found – indicating a higher risk of default.#*#*Show Fullscreen*#*# Source: Hermes, as at February 2017CDS spreads by QESG decile, 2012-2016Mitch Reznick, co-head of credit and head of credit research at Hermes, said: “Although credit risk is the principal driver of both the level of and changes in credit spreads, we know that ESG factors also influence credit spreads.“Given that we know this, in order to deliver on our fiduciary duties we are compelled to assess and price ESG risks when making investment decisions.”The correlation between ESG credentials and credit spreads was consistent but not linear, according to the asset manager. The greatest change occurred between the lowest ESG-scoring quintile of companies and the second quintile.Michael Viehs, manager at Hermes Equity Ownership Services, said the relationship between overall QESG scores and credit spreads held true for the ESG sub-categories.“For all three ESG dimensions, issuers with the lowest scores had the highest CDS spreads,” he said.The asset manager’s research found that although there were correlations between companies’ QESG scores and their credit ratings, there was a wide dispersion of QESG scores within each rating band.“This means that credit ratings do not sufficiently reflect ESG risks,” it said.The asset manager said the model it developed would help it identify opportunities in lower-rated companies with higher ESG scores and to spot issuers at risk because their spreads were too tight relative to their ESG score.Reznick said the decision to pursue the research was borne out of a frustration experienced by the credit team at not being able to price ESG risk as distinct from other more traditional credit risks.He said that although a lot of work and intellectual capital had gone into analysing and understanding more traditional operating and financial credit risks and ESG risks, “there’s been very little done in trying to distil ESG risks from credit risks and price ESG risk”.A lot of research has been carried out into the relationship between ESG and financial performance, but the vast majority of this has been focused on the equity markets. There has been increased interest among investors in developing an understanding of the relationship between ESG and investment performance in the credit markets.The UN PRI, for example, has an initiative to explore the more systematic integration of ESG factors by credit rating agencies, and last year Barclays published a study into impact of ESG on corporate bond returns. It found that applying ESG factors resulted in a “small but steady” performance benefit, with no evidence of a negative effect. There is a clear relationship between companies’ environmental, social, and governance (ESG) credentials and their credit spreads, according to new research carried out by Hermes Investment Management.The asset manager said that before its study, the Hermes credit team estimated the impact of ESG risk on valuations in anecdotal terms, but their subsequent research proved a clear relationship between ESG credentials and performance from a credit perspective.The study enabled Hermes to develop a pricing model that allows it to calculate how much compensation – excess yield above that of government bonds – an investor should receive for a given level of ESG risk.The research examined the relationship between Hermes’ assessment of a company’s ESG performance – captured in a quantitative ESG (QESG) score – and credit default swaps (CDS) spreads. It used CDS because it felt this offered the purest measure of a company’s credit risk.
The UK’s largest pension scheme has agreed a $50m (€40.1m) settlement with PricewaterhouseCoopers’ (PwC) Brazilian subsidiary as part of a class action lawsuit against oil giant Petrobras.The deal forms part of a $3bn settlement with Petrobras, agreed last month and awaiting approval from the court in New York. It relates to accusations of bribery and money laundering. Petrobras admitted in 2015 it had lost billions to corruption.The £60bn (€68.6bn) Universities Superannuation Scheme (USS) worked with US public pension funds from the states of Hawaii and North Carolina on the case, as well as law firm Pomerantz. Legal action was first started three years ago, and last year USS took the role as lead plaintiff on the class action lawsuit.Jeremy Hill, group general counsel at USS, said: “We continue to lead this securities class action diligently and intensively, and we welcome this important additional step in the litigation process for the class. We are pleased with the settlement agreement which has been reached with PwC Brazil, which we believe is in the best interests of the class and concludes an important stage in the action.” If approved, the settlement will be the largest ever involving a non-US company, according to USS.Jeremy Lieberman, co-managing partner at Pomerantz, said: “With allegations of such an extended and pervasive fraud at Petrobras, it is particularly important to look at the role of auditors and other gatekeepers to ensure that a blind eye is not turned to corporate malfeasance.“The settlement announced today ensures accountability for those gatekeepers whose duty it is to protect the interests of shareholders, not their corporate clients.”In a statement announcing the PwC Brazil settlement, Pomerantz said the corruption scandal had involved former executives of Petrobras as well as Brazilian politicians and lawmakers. The fraud involved “billions of dollars in kickbacks, tens of billions of dollars in overstated assets, as well as significant losses to Petrobras investors”, Pomerantz said.Several other European pension funds took part in other lawsuits against Petrobras – which is partly owned by the Brazilian government – in relation to the corruption scandal. Sweden’s AP1 and Dutch agricultural sector scheme AVH settled in 2016 in a class action that also involved UK local authority pension funds and several US pension funds.Giant Dutch pension fund managers PGGM and APG have also been involved in legal action against Petrobras.