BT scheme backs HLAM European
activism fund
The BT Pension Scheme has committed
£63rn to a new Hermes Lens Asset Management (HLAM) shareholder activism
fund for Europe.
HLAM will launch the fund next year
with the aim of raising £634m in new assets.
HLAM claims that the move is another
success for shareholder activism funds.
The new fund will follow hard on the
heels of HLAM's UK focus fund, another shareholder activism scheme which it
launched in October 1998.
Last week the European fund attracted
three new clients - the BG Group Pension Fund, North Yorkshire Pension Fund,
and the Ontario Teachers' Pension Plan Board - with £75m of fresh
money. The UK fund now has 20 clients and over £600m of funds under
management.
The stakeholder activist funds invest
in undervalued companies and then actively encourage corporate change, which
usually includes better corporate governance structures, to improve shareholder
value.
Tony Watson, chief investment officer
at HLAM, said the UK fund had delivered 5% a year over the FTSE All-Share total
return index since its launch.
The approach has delivered successes
such as Trinity Mirror; Tomkins and Delphi Group.
Watson continued: Bass' recent decision
to sell its brewing arm followed prolonged pressure from HLAM to do this so as
to improve shareholder value."
Alastair Ross-Goobey, chief executive
of Hermes, said that the new European fund would focus on Germany and France
initially. As the fund grows, so the manager aims to develop corporate
programmes that can be applied across all major European markets.
Ross-Goobey said the UK fund has
already reached its optimal size and would not be seeking new investors. He
said that the decision to commission reports from management consultants on the
companies in the focus fund had paid off and that similar reports from
integrated investment banks "don't add very much value".
Although HLAM is pleasantly surprised
at the level of interest in shareholder activism among pension funds, many
investment consultants still need convincing of its merits.
Anthony Ess, marketing director at
HLAM, said that consultants are generally slow to take to new ideas, and
added:
"HLAM has usually been winning UK focus
mandates despite the consultants rather than because of them."
By lain Martin, Pensions Week
10 July, 2000
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