Month: September 2020

Danish roundup: LD, PensionDanmark, NREP, PKA, Topdanmark

first_imgDanish pension fund Lønmodtagernes Dyrtidsfond (LD) has picked two US investment managers to run equity mandates worth DKK8bn (€1.1bn) in total, after months of stiff competition.Boston-based MFS Investment Management won a contract to manage DKK6bn in global equities for the fund, which manages cost-of-living allowances given in the past to public and private sector workers, while Fisher Investments of San Mateo, California, picked up a DKK2bn emerging market equities mandate.Lars Wallberg, finance director of the DKK53.3bn pension fund, said: “There was no single factor that determined who got the job in the end, but rather many different aspects of the various managers’ offers.”The two mandates were put out to tender at the end of last year. “For the global equities mandate, we placed importance on, among other things, how managers coped in the financial crisis because it’s important for us to protect members’ savings should stock markets fall dramatically again,” Wallberg said.MFS has a strong and experienced staff team that had proved themselves over the course of several years, he said.Commenting on Fisher Investments, Wallberg told IPE: “We were looking for a manager with a strong top-down investment approach with the objective of managing and mitigating the specific risks associated with investing in these markets.”LD said there had been massive interest in the tender for the global equities and emerging markets mandates, which had prompted more than 180 responses.The list of candidates was then narrowed down to 10-15 equities managers that prequalified and were invited to answer a long list of questions and take part in closer discussions.LD said the two winning managers would be given five-year contracts, although the pension fund will have the right to end the contracts without notice.It has put the management of its entire investment portfolio out to global tender this year.Carnegie Asset Management and Impax Asset Management won mandates in March, and two Danish bond mandates have yet to be awarded.Meanwhile, PensionDanmark is investing in medium-sized businesses in the Nordic region via the Nordic private equity fund Altor IV.The DKK152bn labour-market pension fund did not reveal how much its individual investment was, but Altor IV – the latest private equity fund from Nordic investment manager Altor – raised €2bn at its close.PensionDanmark’s managing director Torben Möger Pedersen said: “Members can look forward to a good return from this investment, which is with a very competent manager that works actively to develop and create value in the businesses.”The fund’s primary focus will be in investments in unquoted companies with turnover of €50m-500m.Altor said the fund had a flexible investment mandate, which also allowed it to make minority investments in publicly traded companies as well as investing in distressed debt.It said the fund’s investor base consisted mainly of US university endowments, charitable foundations and pension funds, with Nordic investors representing 20% of total commitments.The new fund will have a 15-year term – the same as the previous Altor fund.In other news, pensions administrator PKA and life insurer Topdanmark sold a German residential property portfolio to German real estate company Immeo for DKK1.8bn, having achieved 30% growth on part of the portfolio since the two investors took ownership.Nikolaj Stampe, head of property at PKA, said: “We are particularly pleased with the development of this portfolio, and we have now decided, along with Topdanmark, that this is the right time to sell.”PKA said it and Topdanmark each bought half of the portfolio in 2007, and the properties within it were located in Berlin and Dresden.PKA – which manages five labour-market pension funds and has around DKK200bn in assets – said at the time of purchase that property in the two cities had been considered cheap, and this had proved to be the case.The first properties bought increased in value by more than 30% during the ownership period.PKA has around DKK16bn in real estate, with investments mainly located in Denmark.last_img read more

No one would set up cross-border scheme under proposed IORP II – expert

first_imgProposed amendments to the IORP II Directive have failed to produce a sound legal framework for the creation of pan-European pension funds, according to Hansjörg Müllerleile, a corporate pensions expert at German industrial company Bosch. Speaking at Towers Watson’s bAV-Tag occupational pensions conference in Frankfurt, Müllerleile argued that “nobody would sensibly set up a cross-border pension fund” at the present moment based on the IORP II draft released this spring.“I could not back such a decision,” he said.Müllerleile cited in particular ongoing legal uncertainty and the possible introduction of capital requirements. Earlier this week, EIOPA published its consultation paper on the controversial holistic balance sheet (HBS) approach.Instead of the HBS, Müllerleile said he would like to see a “bespoke” supervisory framework for occupational pensions focusing on company pension plans or those run by unions and social partners.“It makes no sense to include competitive pension funds or insurers into this supervisory scope,” he said.He also argued that national labour law should have priority over supervisory decisions, and that supervisors “should not call for things impossible to fulfil under national legal frameworks”.As an example, he cited the European Commission’s failure to acknowledge pension contracts negotiated with employee groups such as unions, as well as its “demands for consent” from each individual plan member.Müllerleile also highlighted the fact the draft IORP II still contained a requirement for cross-border plans to be fully funded at all times, and the requirement to ringfence the assets and liabilities in those pension plans.“There should be only one supervisory framework for pension funds – no matter whether or not they ever did any cross-border business,” he said.He said Bosch had tried to accommodate its employees’ increasing mobility in its pension plan but had failed, due mostly to the above-mentioned reasons.Müllerleile claimed that “10 years had been lost” since IORP I was introduced in 2003, as the directive failed to provide legal certainty or the appropriate legal framework.Apart from the “disappointing” IORP II draft, he also argued that Europe was lacking sufficient competition among service providers for cross-border pension plans.last_img read more

Brussels keen to expedite revised Shareholders Rights Directive

first_imgThe European Commission is seeking to speed up the introduction of a new Shareholders Rights Directive and expects to table new legislation with the European Parliament as early as next summer, according to Jeroen Hooijer, head of corporate governance and social responsibility at the EU.With the revised Directive, the Commission has sought to identify and encourage active shareholding, as well as improve the level of advice provided by proxy voting agencies.It also wants to give shareholders more influence over the remuneration policy of board members and large related-party transactions.Hooijer, speaking at the Eumedion symposium in Utrecht, said he expected the identification of shareholders “would not be too complicated”, and that tackling the issue would be a matter of costs – “and who is going to foot the bill”. However, he said he expected to encounter obstacles on proposals to increase transparency on related-party transactions, “as EU member states tend to already have their own, different rules, with which they’re already comfortable”.Hooijer said the review of the Shareholders Directive fit within the Commission’s overarching plan to harmonise Europe’s capital markets – including rules for the listing of companies.He said this would be necessary if Brussels wanted to increase the attractiveness of long-term investing and active shareholding.Responding to a question from the audience, Hooijer pointed out that a recent survey of investors had found that higher dividends or increased voting rights did little to encourage long-term investment.He added that the Commission had not yet worked out how voting agencies would report back to their clients about their voting behaviour.Hooijer also announced that the Commission was drawing up a report on best practice in ESG investment.Meanwhile, Edith Siermann, governance and active ownership manager at Robeco, pointed out at the symposium that the link between active ownership and long-term investment was “not always clear”.“It is probably difficult to encourage passive investors to become active shareholders,” she said, adding that a distinction for investment style, such as sustainability, would be a better approach.She also warned that implementing new rules on voting agencies would be a challenge due to the large number of players involved.“Currently, nobody is responsible for the voting chain,” she said, before warning that the power of voting agencies must not be increased.Proposals for a revised Shareholders Rights Directive are now with the European Parliament and the Council of the European Union, Hooijer said.last_img read more

​UK Coal scheme lodges legal complaint over Towers Watson advice

first_img“It is alleged that the currency hedge has caused a substantial loss to the Scheme, quantified at £47,500,000, for the period August 2008 to October 2012,” the filing by the consultancy said.The manager is still employed to oversee part of the scheme’s emerging market strategy, according to an interview with Stefan Dunatov, CIO of Coal Trustees, in the November issue of IPE.Discussing the fund’s view of currency risk, he said at the time: “Our belief is that if you buy into the general thesis, then you will want to own the asset and the underlying currency exposure that comes with it.“You either have to believe that the underlying currency exposure will help your long-term total returns as exchange rates converge as consumption grows and these economies become more services-oriented than goods-oriented, or you have to accept that it’s very difficult to forecast currency returns.”Towers Watson was created in 2010 in a merger between Watson Wyatt and Towers Perrin.A spokesman for the consultancy said: “Towers Watson disputes the allegations brought by the British Coal Staff Superannuation Scheme and intends to defend the matter vigorously.”The Coal trustee body could not be reached for comment. The British Coal Staff Superannuation Scheme has lodged a legal complaint against Towers Watson, alleging precursor Watson Wyatt provided “negligent” investment advice.The scheme’s trustee body, which manages £20bn (€25bn) in assets for both the sector-wide funds for the former nationalised industry, brought a professional negligence claim against the consultancy in September 2014, according to filings with the US Securities and Exchange Commission.The claim, initiating a resolution procedure that precedes a court hearing, alleges Watson Wyatt provided “negligent” investment consulting advice relating to a currency hedge.The hedge was put in place due to the industry-wide scheme’s £250m commitment to a BlueBay Asset Management emerging market debt fund.  last_img read more

​APG wins first appraisal-of-share-value lawsuit against Safeway

first_imgAPG Asset Management, the €424bn asset manager for the Dutch civil service scheme ABP, has won an extra $33m (€29.3m) from the sale of its shares in Safeway after a US court ruled that the original share price agreed for the company’s takeover should be increased.Last January, the Safeway grocery chain was sold to Albertsons, a rival supermarket operator owned by private equity firm Cerberus Capital Management, for $9.2bn.Investors were to be paid $32.50 in cash per share, plus a share of proceeds from the sale of ancillary businesses such as joint ventures.The total received by investors to date has been $34.92 per share. However, five institutional investors – including APG and hedge fund companies Merion Capital and Magnetar Capital, which between them owned over 6% of the Safeway shares – launched an appraisal lawsuit challenging the price.The Delaware Court of Chancery has now ordered Safeway to pay $44 per share to the investors who called for an appraisal.For APG, this represents a total uplift of $33m on the original $92.8m cash proceeds of its 2.8m shareholding, which had made up around 1.3% of the total Safeway stock.Merion and Magentar have also accepted the settlement, while the other two litigants are continuing legal action, according to press reports.The number of appraisal cases in the US has surged in recent months.Hedge funds in particular often employ the tactic of purchasing shares just before a takeover, opposing the bid, then suing for a bigger payout.APG says it is the first time it has taken part in an appraisal suit.Harmen Geers, spokesman at APG, told IPE: “This ruling is significant for us in the sense that appraisals were little used until recently.“But we intend to make use of it whenever we think it can help us to make sure our pension funds and their participants receive every euro to which they are entitled.“The fact that in the first instance we have taken this route it has led to a very significant extra payout only emboldens us.”When asked whether there would be a growing trend for European pension funds to file lawsuits for appraisal of share values, Geers said: “It would only be logical for other European pension funds to take an interest in this specific course of legal action.”last_img read more

PGGM’s Lindeijer: Dutch schemes need updated risk models

first_imgEloy Lindeijer, PGGMHe said that he would like to divest from Dutch, German and Austrian government bonds, as well as long-duration interest swaps, in favour of inflation-matching investments such as European property and core infrastructure.The FTK gave the wrong incentive by requiring pension funds to hedge their liabilities against a volatile risk-free market rate, he argued. “This leads to significant investments in government bonds and swaps, with the liquidity call on swaps hampering taking additional stakes in long-duration private investments.”Lindeijer also criticised the FTK’s risk model, in which property and infrastructure had a high risk weighting whereas euro-denominated government bonds were deemed low risk.Bespoke risk modelsUnderfunded schemes – including PGGM’s main client, PFZW, and other large sector pension funds ABP, PMT and PME – are not allowed to add investment risk, whereas schemes that can face higher buffer requirements if they raise their risk profile.In Lindeijer’s opinion, pension funds should be allowed to apply their own fine-tuned risk models to bring their investments in line with what is “sound long-term economic policy”.“It is about broadening the selection of approved matching assets, such as the most solid infrastructure projects, European property and long-duration mortgages,” the CIO argued. The Netherlands’ current risk model is “too static” and predates the financial crisis, “when there was a glut of well-returning matching assets”.He emphasised that, post-financial crisis, not even government bonds are always safe given their susceptibility to rising interest rates and default risk from countries such as Italy.Discount rateThe current discount rate for liabilities was a big source of volatility at pension funds, he said, highlighting its pro-cyclical effects.“If equity markets decline, the risk-free interest rate often falls as well, causing an additional hit on schemes’ coverage ratio. Subsequently, underfunded pension funds can’t increase equity risk, while they would like to invest when markets have bottomed,” he explained.Lindeijer said a stable discount rate would enable pension funds to take the right investment decisions.“As the Netherlands doesn’t have sufficient clout to affect ECB policy, it can change the way we deal with the FTK,” the CIO argued.The FTK’s risk model has also been criticised by Dutch-Canadian pensions expert Keith Ambachtsheer. In an interview to be published in IPE’s December issue, he argued that “the constant pressure to reduce solvency risk to avoid further pension cuts has reduced the long-term wealth-creating capability of the massive €1.4trn pool of Dutch retirement savings”.“Too much is dead money, locked up in low-return fixed income instruments,” Ambachtsheer said. “During the past few years we have benefited from the low-rate policy, as equity markets rose and hedging through swaps and bonds was profitable,” Lindeijer explained. “But now the reverse effect looms.” Dutch pension funds urgently need updated risk models as the current financial assessment framework (FTK) means they miss investment opportunities and exposes them to rising interest rates, according to PGGM’s chief investment officer Eloy Lindeijer.Speaking to IPE’s Dutch sister publication Pensioen Pro, Lindeijer said schemes were stuck with low-yielding or even loss-making fixed income holdings.“They are a big source of volatility, and investing in them means a direct loss in real terms and comes at the expense of opportunities,” he said.The investments would be hard hit when interest rates rose again, for example as a result of the European Central Bank ceasing its quantitative easing policy, the investment chief said.last_img read more

EU sets out derivatives rules for no-deal Brexit

first_img“This will allow EU27 operators that currently have no immediately available alternative in the EU27 to fulfil their obligations under EU law,” the paper said.The Commission also said it would temporarily exempt investors clearing derivatives “over the counter” from obligations under its European Market Infrastructures Regulation, to allow them to move from the UK to the EU without added costs or a change of status.“In all sectors of financial services, firms should continue to take all the necessary steps to mitigate risks and ensure that clients continue to be served,” the Commission said.“Firms should actively inform clients about the steps they have taken and how they are implementing them. For their part, clients in the EU of UK firms need to prepare for a scenario in which their provider is no longer subject to EU law.”Investors and advisers have been flagging concerns for some time about the impact of Brexit on the derivatives industry. The Bank of England has estimated that roughly £67trn (€76trn) worth of over-the-counter derivatives could be affected if the UK leaves the EU without a deal.The UK’s Financial Conduct Authority (FCA) last month warned of fragmented markets and liquidity shortfalls if the country exits the EU in March without a withdrawal agreement.Reduced liquidity could push up costs and make it harder to execute large transactions, the FCA said, with firms potentially “unable to trade certain securities” between the UK and the European Economic Area (EEA).“This could lead to a fragmented market as UK and EEA firms would no longer be able to use the same pool of liquidity,” the regulator said. “Over time, this could have a harmful impact on financial services markets more widely, through reduced competition and increased costs for consumers in both the EEA and UK.” The EU has set out a plan to mitigate the risks to the multi-trillion-dollar derivatives market in case the UK fails to ratify its EU withdrawal agreement before 29 March.Derivatives counterparties based in the UK will be able to continue to do business with EU investors for 12 months after Brexit through a “temporary and conditional equivalence decision”, the European Commission said in a paper published yesterday.The measure would allow the European Securities and Markets Authority (ESMA) to continue to treat UK firms as if they were still within the EU.In addition, UK-based security depositories will get a 24-month reprieve as part of the EU’s contingency plan.last_img read more

​ESG roundup: Baltic blue bond, PRI signatory growth

first_imgFolksam, AMF and AP3 are among Swedish pension funds investing in a five-year “blue bond” issued by the Nordic Investment Bank (NIB), its first such instrument. The proceeds of the Nordic–Baltic Blue Bond will go to support the bank’s lending to selected water management and protection projects, NIB said.Launched as a SEK2bn (€195m) deal, the issue’s final order book reached over SEK3.2bn, with 21 accounts participating, the bank said.Some 48% of the issue was taken up by pension funds, and 89% of all investors subscribing were from Sweden, according to data from NIB. It said: “The transaction attracted strong interest from dedicated green investors and committed mainstream accounts such as AMF, AP3, Captor, Cliens Kapitalförvaltning, Handelsbanken, LF Jönköping, LF Treasury, SEB Investment Management, WWF and Öhman Fonder.”Folksam Group was also mentioned as an investor in the issue.Michael Kjeller, head of asset management and sustainability at the Folksam Group, said: “Sustainability, not least in relation to the Baltic Sea, is something very close to our clients’ hearts.“We welcome the efforts from NIB to enable this type of bond,” he said, adding that with this investment, Folksam was taking yet another step towards a sustainable world.The blue bond is listed on Nasdaq Stockholm, and the lead manager is SEB.PRI signatory growth The Principles for Responsible Investment (PRI) had 2,232 signatories at the end of 2018, a 21% increase on the previous calendar year, it reported yesterday.Growth in the signatory base was particularly strong across US and Canada, as well as in the UK and Ireland, it said. Newcomers included the corporate pension funds of Novartis in Switzerland and National Grid in the UK, the Employees’ Retirement System of the State of Hawaii, the Government Pension Fund of Thailand, and insurance groups AG2R (France) and Swiss Life (Switzerland).”Despite concerns over loss of momentum around issues such as climate change — as noted in the recent Global Risks Report by the World Economic Forum — investors are becoming aware of the risks and the opportunities around ESG factors,” said the PRI.“Continued growth in demand from global investors, their clients and beneficiaries for investment products and solutions that consider ESG issues, as well as stronger regulatory guidance on responsible investment in many countries, especially within the EU, is also fuelling signatory momentum.”According to the World Economic Forum (WEF) report, global risks were intensifying ”but the collective will to tackle them appears to be lacking”. Prepared by the WEF with Marsh & McLennan Companies, a global professional services company, and Zurich Insurance Group as strategic partners, the report includes the results of an annual survey on global risks perception. Environmental risks continued to dominate, according to the latest report, this year accounting for three of the top five risks by likelihood and four by impact.“Extreme weather was the risk of greatest concern, but our survey respondents are increasingly worried about environmental policy failure: having fallen in the rankings after Paris, “failure of climate-change mitigation and adaptation” jumped back to number two in terms of impact this year,” the report noted.The February edition of IPE magazine will include a special report on green finance, with a tinge of blue to itlast_img read more

Institutional investors’ delegation to visit tailings dam communities

first_imgA high-level delegation of institutional investors is to visit the sites of the Mariana and Brumandinho tailings dam collapses in Brazil later this year in order to assess for itself the responses to the tragedies amid “radically divergent” accounts of what has happened. The delegation will be made up of representatives from the Church of England Pensions Board (CEPB), the Council of Ethics for the Swedish Public Pension Funds, UN Principles for Responsible Investment (PRI), and the Local Authority Pension Fund Forum (LAPFF).Last January, the collapse of a tailings dam near a mine in south-east Brazil killed 270 people, while a river of iron ore waste contaminated the countryside. This led to calls from institutional investors for a global independent public classification system to monitor the safety risk of such dams.Immediately afterwards and in response to the disaster, the CEPB and the Council of Ethics set up the Global Mining and Tailings Safety Initiative, a vehicle for engagement which convenes institutional investors active in the extractive industries and which now has over US$14trn (€12.7trn) in assets under management. The CEPB and the Swedish funds also sold their shares in Vale, the company which owns the mine, immediately after the disaster.The delegation to Brazil was announced today at the Initiative’s summit held in London, in which representatives of the communities affected participated. ‘Radically divergent accounts’Doug McMurdo, LAPFF chair, said the organisations behind the initiative sought equally to understand both the company and the community perspectives.“As both human beings and investors, we need clarity not just on what happened, but about how to respond”Doug McMurdo, LAPFF chair“Our difficulty is that we are hearing radically divergent accounts of events and responses, and as both human beings and investors, we need clarity not just on what happened, but about how to respond to where we are now and how to prevent future tragedy.”McMurdo continued: “To this end, the delegation will undertake its own assessment of the responses from companies to the Mariana and Brumadinho disasters. It will report against defined terms of reference, which will be published in due course following engagement with the communities and other stakeholders.”The summit also saw the launch of the first-ever global public database of over 1,900 tailings dams, which captures disclosures made by mining companies in response to the request made by the group.At the summit, investors adopted a set of principles for mining companies as well as principles to guide how investors engage with and finance the sector. These principles will be presented to PRI and all members asked to support them.Meanwhile, the group called on companies and governments to jointly set up a global tailings alert/monitoring system similar to those in aviation and shipping, to establish an urgent process of identifying and then removing the most dangerous tailings dams.John Howchin, secretary general of the Council of Ethics for the Swedish Public Pension Funds and co-chair of the Global Mining and Tailings Safety Initiative said: “One year on from this disaster, that should never have happened, we release the first global tailings database tracking 1,900 of the world’s tailings dams.“This is a fraction of the dams that exist but it is a start, and establishes what we expect from any company seeking finance from investors.”Howchin said: “We are continuing to engage with companies that have not disclosed, and will use votes and company AGMs to ensure this request is responded to. Not reporting is unacceptable and poses a risk to our pension funds.”last_img read more

Gold Coast home snapped up in six minutes at auction

first_img19 Twenty Fifth Ave, Palm Beach.“They’ve been actively looking for quite a while and this one ticked a lot of boxes,” he said.More from news02:37International architect Desmond Brooks selling luxury beach villa15 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoMr Powell said the couple were drawn to the property’s beach house feel. It was a feature that appealed to many prospective buyers, he said.Throughout the 30-day campaign, Mr Powell lead 53 inspections of the four-bedroom home and it had more than 4000 views on realestate.com.au. He said several offers had been made prior to auction.The dual-living home, which property records show was built in the 1960s, has undergone an extensive renovation during the past few years.Sellers Marcel and Jayne Maujean told The Gold Coast Bulletin last month they wanted to breath new life into the home without destroying its traditional beach house charm, which was what also drew them to the property five years ago. 19 Twenty Fifth Ave, Palm Beach. 19 Twenty Fifth Ave, Palm Beach.THE sale of a renovated Palm Beach house will be remembered as one of the quickest after it was snapped up in six minutes at auction on the weekend.Three bidders vied for the Twenty Fifth Ave property on Saturday morning.The auction, which was streamed live online, began at 10.16am with an opening bid of $830,000.That figure rapidly climbed to $985,000 when the hammer came down at 10.22am.Marketing agent Guy Powell, of Ray White Mermaid Beach, said 38 bids were made in that period in front of a crowd of about 20.He said a young Gold Coast couple were the new owners. 19 Twenty Fifth Ave, Palm BeachBut it proved a much bigger job than they anticipated.“If I did my time again I probably would have knocked it over,’’ Mr Maujean said.But the hard work had paid off, he said, and they were pleased with the result, particularly the main bedroom, which features a 100kg barn door and study nook. Mr Powell said the market had been steady in Palm Beach but he expected it to pick up during the next few months. “Winter was a bit quieter in (some) periods but it was still strong,” he said. “Coming into spring, I think we’re going to have a few good months ahead.”According to latest CoreLogic data, the media price for a house at Palm Beach is $812,000 and $450,000 for a unit. House prices have jumped 8.3 per cent in the past year while units have climbed 4.9 per cent. REAL ESTATE: 19 Twenty Fifth Ave Palm beachlast_img read more