ABP breaks ranks with peers in accepting high private equity fees

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first_imgThe larger pension funds in the Netherlands have come under pressure from the public to rein in costs for investments in non-listed companies, while the high bonuses received by private equity managers have also drawn fire.PFZW, the €166bn pension fund for the healthcare sector, and its asset manager PGGM have made clear their aim to cut private equity fees at all costs.PGGM has even established a 15-strong private equity team for this purpose.Last year, ABP paid more than €500m in bonuses to private equity managers.Erik van Houwelingen, a board member at ABP, conceded that the issue of bonuses was “difficult” for the pension fund as well.“But, as long the fees are linked to pension-enhancing performance, I can justify these costs,” he told the FD. Over the course of 2014, ABP’s 5.1% private equity allocation returned 23.3%.Over the last 10 years, the asset class has returned 14.9% on average for the scheme, while equity has returned 7.3% on average. Van Gelderen stressed that APG was not thinking to manage private equity investments on its own, “as this would require expertise we don’t have”.He added, however, that the asset manager took pains to reduce private equity costs through manager selection and co-investments.In other news, ABP has divested from Netherlands-based Mylan after engagement with the pharmaceutical company – over the use of Rocuronium Bromide for capital punishment in the US – proved “unsuccessful”. Van Houwelingen said Mylan refused to take steps to prevent its muscle relaxant from being used in executions.In a statement, Mylan said its products were meant to be used “in compliance with approved labelling and applicable care standards”.It said it did not directly supply the drug to prisons and that it had “no knowledge of its use for lethal injections”.The Dutch Ministry of Foreign Affairs, however, said it had shown Mylan pictures – obtained by UK human rights organisation Reprieve – from the Virginia Department of Corrections showing that the department was stocking the disputed drug.The US state still carries out the death penalty. ABP, the €356bn pension fund for Dutch civil servants, has broken ranks with other large pension funds in the Netherlands after suggesting it has accepted the relatively high fees associated with private equity. Eduard van Gelderen, CIO at ABP asset manager APG, said the pension fund had resigned itself to paying higher fees for exposure to the asset class.“A small number of successful private equity managers are in a position to demand high fees,” he told Dutch financial news daily Het Financieele Dagblad (FD).“If we don’t pay those fees, they don’t invest our assets. So, either we must fully withdraw from the asset class – and miss out on the returns as a consequence – or we must accept the cost level.”last_img read more

Canaries keeping boss options open

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first_imgChief executive David McNally has suggested Norwich could move swiftly to replace Chris Hughton if their Premier League status is threatened. In a congested bottom half of the table, the Canaries are two places and one point above Sunderland, who occupy the final place in the relegation zone but have a game in hand. The Canaries are the only side in the bottom six not to have changed manager this season. Press Associationcenter_img “It would be almost delinquent of the football club to not be aware of potential candidates if for any reason your manager left,” McNally told the Eastern Daily Press. “If results are not good enough you have to be aware of who is out there to help. You look at the market and who might be right for Norwich City. “If we needed to make a change – and the average tenure of a Premier League manager is about a year and a half, which puts Chris in the top six or top eight longest serving right now – then if a change was necessary it wouldn’t be a case of, who are the contenders? It would be a case of reviewing what is required, where are we going and who is best placed to take the club forward.” The bottom 11 teams are separated by eight points with 12 games to go and the Canaries are three points behind 10th-placed Swansea and West Ham, in 11th, whose recent revival has taken them clear of the drop zone. “If we believe Chris is the right man to take the club forward then we stick with that,” McNally added. “It is fine margins in our sport and what you have to be sure of is a guaranteed improvement.” last_img read more