Month: September 2020

RPMI joins with PGGM, CalSTRS to vote against Oracle board

first_img“This is not a situation any board should ignore, even taking into account the advisory nature of the pay resolution, as it is clearly a request for change by shareholders.”The letter continued that there had been “no substantial changes” in Oracle’s compensation structure since, and that the board was therefore failing in its duty to shareholders.“It’s an unusual step for us to be voting against the entire board, but we feel the board needs to take collective responsibility for its lack of action.”Deborah Gilshan, RPMIAs a result, the three investors said they would withhold their support for the current board at the annual general meeting on 31 October.“Consistent with this view,” they added, ”we further consider it is in the best interests of our beneficiaries to support the shareholder proposal seeking the appointment of an independent chairman to the board and to vote against the advisory vote on pay.”The letter also noted that concerns were not merely limited to executive pay, but that it extended to “wider issues of proper board accountability”.Gilshan told IPE it was an unusual step for RPMI to be acting so publicly, but that it was “a signal of the severity of our concerns in this case”.“We feel we’ve undertaken our responsibility as shareholders to vote, engage and to write to the company with our concerns,” she said.“We’ve tried to engage with the compensation committee, and they weren’t able to meet with us to hear our concern.”She added: “It’s an unusual step, as well, for us to be voting against the entire board, but we feel the board needs to take collective responsibility for its lack of action.”Jackson, corporate governance adviser at PGGM, went so far as to call their objections to the board “unprecedented” and said repeated attempts were made to raise the investor group’s concerns over the lack of performance vesting targets in incentive awards, as well as the discretion granted to Oracle’s compensation committee.“We have chosen to address all shareholders’ directly,” she said, referencing the letter filed with the US Securities and Exchange Commission, “in favour of attending the annual shareholders’ meeting, as we feel this is a more effective way of having our concerns heard.”She added: “If our concerns aren’t heard during tonight’s AGM, we will consider all our options.”Gilshan would not be drawn on the potential outcome of the vote, which will be known following today’s AGM in California.,WebsitesWe are not responsible for the content of external sitesLetter to Oracle shareholders, as released by the US Securities and Exchange Commission The £20bn (€23.3bn) RPMI is set to vote against the entire board of California-based technology company Oracle Corporation in a dispute over executive pay and board accountability.Joined by €140bn Dutch pension manager PGGM and the $172bn (€125bn) California State Teachers’ Retirement System (CalSTRS), the UK’s RPMI decided on the “unusual” step, according to its corporate governance counsel Deborah Gilshan, after the firm’s compensation committee failed to engage with its concerns.In a letter co-signed by Gilshan and her PGGM and CalSTRS counterparts Catherine Jackson and Anne Sheehan, the pension managers asked fellow Oracle shareholders to consider in whose interest the company’s board was acting after it ignored an attempt to get last year’s executive remuneration package approved by a majority.The letter noted: “At the 2012 annual shareholders’ meeting, the advisory vote on pay not only failed to receive a majority vote in support, but, by our calculations, 86% of independent shareholders voted against the resolution.last_img read more

Hermes Real Estate enters £800m Manchester redevelopment JV

first_imgHermes’s development arm, Argent, however, will not be involved in the project.The developer, which Hermes bought in 1997, is currently working on the mixed-use King’s Cross development.Chris Taylor, chief executive at Hermes Real Estate Investment Management, compared NOMA’s attributes with the King’s Cross scheme and Birmingham’s Paradise Circus.He said: “This is consistent with our UK strategy of investing in commanding sites within major urban areas.”The joint venture is the latest evidence of growing interest from institutional investors in regional UK property markets.Taylor said Hermes was attracted to areas benefiting from “improved infrastructure, regeneration, enhanced public realm and proximity to major retail and leisure facilities”.Late last year, Hermes sold a 50% stake in a £270m Milton Keynes shopping centre on behalf of the BT Pension Scheme, which had owned the 1.3m sq ft asset for nearly 40 years. Hermes Real Estate is teaming up with The Co-operative Group on the UK’s biggest regional redevelopment project, the mixed-use NOMA scheme in Manchester.The Co-Op and Hermes, the asset manager wholly owned by the BT Pension Scheme, will be equal partners in the £800m (€967m) joint venture.An initial agreement is expected next month.The 10-year project will see 20 acres of land developed in the centre of the city.last_img read more

AIFM Directive ‘forces’ Blue Sky Group to split into three divisions

first_imgThe €16bn asset manager and pensions provider Blue Sky Group is to split its organisation into three separate entities following the introduction of Alternatives Investment Fund Managers Directive (AIFMD).In its 2013 annual report, it said the new Directive had forced it to create separate organisations for collective and individual asset management and advice, as well as one for pensions management and board support.The AIFMD is chiefly aimed at managers of private equity and hedge funds investments.In Blue Sky’s annual report, Toine van der Stee, the company’s director, criticised the profusion of new financial legislation and rules. While conceding that legislation “made sense” to some extent against the backdrop of the financial crisis, he argued that smaller financial institutions were now failing to cope with the rising burden of regulation.Van der Stee also lamented the “division and lack of leadership among politicians and the social partners, and within the pensions sector itself” with regard to the review of the Dutch pensions system.He said these failings had also increased costs for pension funds considerably, as they have been forced to prepare for policy changes time and time again.As an example, he cited the application for an AIFMD licence – required for collective asset management – which has already cost more than €1m for Blue Sky to prepare.Van der Stee also claimed that the costs of governance and support at pension funds had increased disproportionally, whereas the costs of asset management and pensions administration had remained relatively stable in recent years.Blue Sky said further improvement of information management, as well as accessibility of information for pension funds’ boards, was among its priorities for 2014.The company serves approximately 20 pension funds and insurers – including the three large KLM pension funds – with 85,000 participants in total.last_img read more

Year-to-date return at Finland’s VER slips to 1.1% on share price falls

first_imgIn the first quarter of this year, VER posted a 7.5% return, but this gave way to a loss of 1.8% in the second quarter.In the nine months to the end of September, VER’s listed equity investments generated a 2% return overall, down from 9.8% in the same period last year. Liquid fixed income investments suffered a 0.3% loss.Fixed income overall, including private credit funds, makes up more than half of VER’s total portfolio.Private credit funds produced higher returns than liquid bonds with a 4.3% return in the nine-month period, according to the preliminary interim figures.This investment sector continued to grow, VER said, particularly in Europe.“Banks’ difficulties in financing small and medium-sized enterprises have fuelled demand for private funding,” it said, adding that the pension fund now intended to increase its private credit investments in Europe and the US.In August, VER appointed a new head of fixed income, Mikko Räsänen, to take on responsibility for the pension fund’s fixed income portfolio, worth around €9bn.Viherkenttä said at the time that Räsänen, who led several different teams in portfolio management and product development in his previous employment at OP Financial Group, was expected to broaden the spectrum of expertise in VER’s fixed income team.Meanwhile, real estate funds returned 4.3% between January and September, and unlisted equities 7.2%.The fourth quarter of the reporting year, however, has started in a more upbeat mood, Viherkenttä said.He said that, for long-term investors such as VER, big swings in share prices also present opportunities. “Early this year, VER sold large chunks of equities, but, after the fall in share prices during late summer, we’ve been shopping around again,” he said.VER’s total assets fell in value to €17.4bn at the end of September from €17.6bn at the end of December 2014.The pension fund said it had been required to contribute an extra €500m to the government budget this year. Finland’s State Pension Fund Valtion Eläkerahasto (VER) has reported an investment return of just 1.1% over the year to the end of September, having made a 4.2% loss in the third quarter alone.According to its interim report, falling share prices, particularly in August, were to blame for the performance.Timo Viherkenttä, chief executive at the pension fund, said: “The overall fall in share prices following the strong market performance during the first few months of the year continued with twists and turns up to the end of September.“The plunge was deepest in August when fears about stalling economic growth in China caused investors to flee the emerging markets.”last_img read more

UK’s PIC attracts Chinese investor as part of £250m capital boost

first_img“Our investment in PICG is consistent with the strategic goals our company has set for its future development outside China and across the financial services sector,” he said.“This includes building long-term industry leaders in sectors with sustainable and profitable growth. Our intention is to fully support PIC’s growth over the long term.”Wilhem van Zyl, chief executive at Reinet, which invested £400m in PIC in 2012, said he was “delighted” to be growing investment in the company.“Since we made our initial investment in 2012,” van Zyl said, “PIC has grown considerably and consistently, maintaining its leadership position in a market with strong growth prospects.“We are very confident PIC has established an excellent foundation to develop into a leading business in the UK financial services sector.”Interest in buyouts and other de-risking strategies has remained constant over the last few years, with PIC recently completing a £2.4bn buyout for the Philips Pension Fund in the UK. Pension Insurance Corporation (PIC), the specialist UK insurer, is set to raise £250m (€315m) in equity capital, agreeing to a cash injection from an existing shareholder.PIC said that, in addition to a £140m investment from existing shareholder Reinet, new Chinese investor, Legend Holdings, would buy shares worth £110m in PIC Group, the insurer’s ultimate parent.In a statement, PIC added that Legend had shown an interest in investing above and beyond the £110m initially agreed, saying further commitments could either take the shape of capital injections or the acquisition of existing shares owned by its employees.Li Peng, senior vice-president at Legend, said the company was “very excited” at the prospect of becoming a significant shareholder in PIC Group.last_img read more

​BHS trustees ‘very concerned’ after scheme restructure plan dropped

first_imgAsked by a member of the joint work and pensions/business, innovation and skills select committee hearing into the collapse of the retailer whether the suspension of discussions around a restructure amounted to a “bombshell”, Martin was frank.“From the point at which the trustees first considered Thor and thought Thor represented a better outcome for our members than the PPF, we [had] been working to deliver it, so it was very, very disappointing when we first heard it was going to be paused,” he said.The suspension, the committee was told, was initially intended to allow for a strategic review, as well as for results of Christmas trading in 2014 to be examined.But Martin admitted that the postponement of the restructure was a matter of concern.“At the time Project Thor was put on pause, I became very concerned about the corporate support for the scheme, given the message we had been delivered earlier in the process,” he said. He added that the fund de-risked its investment strategy in light of the postponement, as the trustees “had to behave as if we had no covenant”.Funding ‘into the future’The uncertainty seen during Martin’s tenure as chair of trustees contrasted with the relationship enjoyed by his predecessor, Margaret Downes, who retired in late 2013.Asked about the 23-year recovery plan agreed between trustees and the sponsor in 2012, she recalled a meeting whereby it was made clear the sponsoring employer “was not prepared to give any more money than £10m (€12m) a year” towards deficit reduction.Downes did add that the £10m a year upper limit came with a commitment to fund the £10m payment “into the future”, and that, at the time, no impression was given BHS would not continue to be a well-supported enterprise.The hearing follows the collapse of BHS, which left its two pension funds with buyout deficits in excess of £570m.Former sponsor Arcadia and the Pensions Regulator have argued over details of a 2015 sale to Retail Acquisitions, the pension scheme’s sponsor when BHS collapsed earlier this year. The withdrawal of a plan to restructure the pension funds of UK retailer BHS left its trustees “very concerned” and made them question the sponsoring employer’s level of support for the underfunded schemes, MPs have heard.Chris Martin, managing director of Independent Trustee Services and chairman of both BHS funds, said the proposed restructure of the scheme, called Project Thor, had been seen as offering a “better outcome” for the fund’s members.Members would have been offered a lump-sum payment, the opportunity to transfer to a new scheme where benefits would be higher than those offered by the Pension Protection Fund (PPF) or the ability to remain in the current schemes and transfer into the PPF.However, Project Thor was “paused” by Taveta Investments – parent of former sponsor Arcadia Group and therefore the ultimate parent company of BHS – in September 2014.last_img read more

Norwegian Government Pension Fund Global cuts more coal stocks

first_imgThe exception to this is green bonds, or subsidiaries deemed to have significant renewable energy activity, NBIM said.In addition to the 15 new exclusions, 11 companies have been put under observation, the asset manager said, because there is doubt in these cases as to whether the conditions for exclusion have been met, or as to future developments, for example.NBIM said that, in total, it has now excluded 59 companies and put 11 under observation on the product-based coal criterion. “Further exclusions will follow in 2017,” it said.As a result of the updated implementation of the criterion, NBIM said it had banished another 30 subsidiaries that issued bonds, with 21 of those being units of firms excluded in the first round in April 2016, when 44 companies and eight subsidiaries were excluded.The Norwegian parliament voted in May last year to order the GPFG to sell off its holdings in companies that have 30% or more of their activities in the coal business. The Norwegian Government Pension Fund Global (GPFG), the country’s NOK7.5trn (€830bn) sovereign wealth fund, has decided to exclude another 15 companies from its investments because of their coal business, bringing the total number it has shut out to 59.The exclusions follow Norges Bank Investment Management’s second round of analysis of companies that may be affected by this criterion. Norges Bank Investment Management (NBIM), which runs the former oil fund, said these exclusions followed its second round of analysis of companies that might be affected by its coal exclusion criterion, and was broader than the first round, announced in April.“The implementation comprises all companies’ subsidiaries that issue bonds,” it said, adding that this was an expansion since the first round of analysis. last_img read more

Peter Kraneveld: Contrarian thinking in the age of populism

first_imgBoth in the UK and the US, decades of progress in all kinds of fields are threatened. In both countries, hate crimes have already gone up by startling percentages. Due to deepening political divisions, it is not even excluded that at least one of the two countries will fall apart. Ironically, those most in favour of populism are among the first to suffer from it, by economic decline, unemployment and inflation. Voter disappointment seems unavoidable. Will it lead to even more radicalisation?It is up to the British and Americans how their countries are governed. However, their behaviour has an influence on other countries. Populism lurks big and ugly in many European countries, and some, like Poland and Romania, already have a more or less populist government. In the Netherlands and France, elections will come shortly, and their populist parties get the most votes in polls.Yet, there are positive signs. Austria invalidated the results of its presidential election because of “irregularities”. When the election was repeated, the populist candidate was beaten by a reasonable margin, not the thin margin the polls had predicted. Angela Merkel, the new ‘leader of the free world’, is addressing the real and serious issue of refugees. Peru – a model of good governance these days – and Mexico have shrugged off Trump’s rejection of the Trans-Pacific Partnership by opening to China, Trump’s bugaboo. All major Dutch political parties have excluded a coalition with the populist party, and, without a coalition, it cannot govern. French presidential candidate François Fillon and even Emmanuel Macron are beating Marine Le Pen in the polls.Investors have learned the hard way to look for turning points in the cycle. They look at consensus opinions and the surrender of the holdouts to the communis opinio as signs of an approaching turning point. That can be applied to political risk also. It just might be that 2016 was a wake-up call and that Trump was the crest of a wave of populism now receding, as people have started to realise its dangers. Maybe politics will change in 2017.Populism cannot and should not be crushed. Democracy is not the tyranny of the majority but the art of compromise. In a democracy, even populists must be represented and heard. However, populism can be reduced to its proper place – not a leading political dogma but a way to keep starry-eyed politicians honest and make them think hard on how to make long-term changes palatable for the population at large. The great thing is that you can help that happening. When your time comes, take the trouble to vote. Vote with your brain, vote for co-operation, inclusion, embracing modern times and changing with them.Peter Kraneveld is an international pension expert at PRIME bv Peter Kraneveld reminds us that democracy is the art of compromise, where even populists must be heardThe most common, and most error-prone, way to ‘predict’ is to extrapolate. The media are busily extrapolating Brexit into the EU falling apart (again), and the US presidential election into populism taking over the world, giving what should have been a festive change of the year a pessimistic gloss. Let’s think differently.The year 2016 has turned out to be shocking. The British population opted out of the EU, and the US elected the irresponsible Donald Trump as president. The two events have much in common, now labelled as ‘populism’. Newspeak struck in other areas as well. In both countries, there was dissatisfaction with the state of affairs, now labelled as the Establishment, and a willingness to reject. What was shocking is what was rejected: rationalism, environmentalism, science, respect for others, hospitality and truth. What was embraced was just as shocking: nationalism, irrationality, innuendo, isolationism, racism and misogyny.Almost forgotten were such 2016 issues as refugees, now labelled ‘immigrants’; officially supported hacking attacks on computers of other governments, still waiting for a label (‘act of war’ and ‘freedom of information’ could be considered); and lying out loud in public, now known as ‘post truth’ and ‘fake news’. Not that these developments are innocent. In early January, a Pakistani minister threatened Israel with a nuclear attack after he let himself be misled by ‘fake news’.last_img read more

Hedge funds more willing to cut fees as battle for institutions heats up

first_imgIn the latest poll, 64% cited investor demands for more favourable fees as a key driver of change for the industry in 2017. This was second only to performance, cited by 73% of fund managers.A year ago 33% of fund managers named performance and 28% pinpointed fees as drivers of change, Preqin said.The group said this change indicated concerns around these areas were growing “in light of an increasingly cautious investor base”.Amy Bensted, head of hedge fund products at Preqin, said: “Investor dissatisfaction shows no signs of abating in the early part of 2017, and it is clear that addressing investor pressure around performance and fees will be the key challenge for hedge fund managers in the year ahead.”Hedge fund managers would aim to build on the three-year high average returns of 7.3% in 2016 to restore confidence in the asset class as a whole and start reversing the trend of outflows, she said.But improved performance alone would not be enough to calm investors’ worries that hedge funds were not giving them sufficient value, Bensted said. Investors indicated they wanted to see more cuts in fees, and managers seems increasingly inclined to provide them, she added. Hedge fund managers are more willing to reduce their fees as the competition for institutional investor clients intensifies, according to a new report from Preqin.The alternatives assets data firm said 74% of the fund managers it surveyed in November 2016 were willing to reduce fees in general, and over half reported that they would cut their management fee.In its Hedge Fund Manager Outlook for the first half of 2017, Preqin said: “This shows that fund managers are receptive to lowering their fees in the current climate as competition for institutional capital intensifies.”Since 2007, the average management fee for hedge funds launched each year has been gradually decreasing from 1.66% to 1.51% in 2016, it said.last_img read more

ESG investing does not cost more, research shows

first_imgThe consultant said the results didn’t need to be adjusted for a pension fund’s scale “as the largest schemes were always high on the VBDO list”.“Earlier research has shown that there is no link between scale and costs,” Siegelaer said. “Large schemes do have benefits of scale, but usually have larger investments in expensive asset classes, such as private equity and infrastructure.”An improved ESG score based on governance, policy, implementation and accountability didn’t lead to higher costs, he argued.Siegelaer found that, for example, the pension funds Detailhandel (€21bn), Hoogovens (€8.7bn) and ABN Amro (€26.5bn) had all improved their ESG scores in recent years, while only Hoogovens experienced higher costs – up by just one basis point. Costs at Detailhandel and ABN Amro fell by the same amount.According to Siegelaer, the cost level at all three schemes was below average.He said that smaller schemes in particular were concerned about increasing costs when adopting an ESG approach: “They don’t know where to start and aren’t keen to spend days formulating ESG policy.”He added that pension funds could start ESG investing without overhauling their investment policy in three ways.“Pension funds with an active investment policy could, for example, switch from a traditional approach to active investing tasking the asset manager with specifically factoring in ESG considerations,” Siegelaer said. “They could also use indices that take ESG criteria into account.”A third way of improving ESG performance without additional costs was to combine engagement with a passive investment strategy, according to the consultant.“A pension fund can compensate the additional costs of engagement through increasing its passively managed mandates based on ESG indices,” Siegelaer said. Pension funds performing well on environmental, social and corporate governance (ESG) factors don’t incur higher asset management costs, according to research.Research by Dutch consultant Gaston Siegelaer indicated that improvements to investors’ ESG policies did not increase costs either.Siegelaer analysed cost data from 2016 and 2017 at the 50 largest Dutch schemes monitored by the Association of Investors for Sustainable Development (VBDO), and found no correlation between the level of asset management costs – including transaction costs – and their VBDO ranking.“Schemes with a high ESG score didn’t incur higher costs than pension funds at the bottom of the list,” he said, adding that spikes in costs couldn’t be explained by ESG efforts.last_img read more