IVG’s tranche of the loan is in Swiss francs, which had appreciated against sterling by more than 60%.IVG had a 50% stake in the 30 St Mary Axe property, held in the Euroselect 14 fund, with Evans Randall as equal partner. The joint venture paid £630m in 2007 for the building, using £400m of debt.Designed by Lord Foster, the 40-storey skyscraper is currently multi-let to around 20 tenants including Swiss Re and ION Trading.Jamie Olley, Deloitte Real Estate head of city investment, said the property provided an “attractive combination of stable and reversionary income”, with opportunities to add value via asset management.Olley said: “The property will appeal to a wide range of domestic and international investors, and we are confident of maximising returns to the receivers and creditors.”Earlier this month, IVG Immobilien had its insolvency plan approved by a German court, clearing the way for a €2.2bn debt reduction programme.The plan includes a debt for equity swap – taking IVG off the stock market.IVG said the Bonn Regional Court’s rejection of complaints against the plan by investors allowed it to proceed with restructuring.Under the plan, IVG Immobilien and its current subsidiaries, IVG Institutional Funds and IVG Caverns, will run as separate and independently operating companies. IVG Immobilien will operate solely in real estate, while its Institutional Funds arm will focus on business with real estate funds for institutional investors.Insolvency proceedings – which have lasted almost a year – will close by the end of this quarter. IVG Immobilien’s Gherkin tower in London has been put up for sale three months after being put into receivership with Deloitte.Savills and Deloitte Real Estate, both companies confirmed, are marketing the 505,000 sqft office tower.Media reports suggest the asset could be sold for as much as £650m (€819m).IVG Immobilien called in receivers in April this year as part of the German firm’s restructuring plan, with its loan-to-value ratio having risen above 90% and well above its 67% LTV covenant.
In February, GCH’s board, with the support of its majority shareholder, recommended a delisting from WSE, together with a public tender by the company at a price of approximate PLN40 (€9.70) a share, based on the average of the previous six months’ trading.GCH arguments for the delisting include a change of strategy, the costs of maintaining the listing, the low and declining trading volumes of its shares in the past seven years, and the likelihood the Polish pension reform of 2014 will reduce the pension funds’ appetite for investing the WSE, and consequently the liquidity of GCH shares.The shareholding pension funds have objected to the proposals.Ahead of an extraordinary general meeting held in Rotterdam on 20 March, the management companies of five pension funds (ING, representing both its second and third-pillar funds, Aviva, Nordea and PZU) signed a temporary agreement on protecting minority shareholder rights.In a joint statement, they argued that delisting would be detrimental to minority shareholders, while the PLN40 tender offer price fails to provide them with a fair exit opportunity as it diverges from the company’s fair value.The statement also pressed for the delisting decision to be approved by a qualified majority of four-fifths of votes cast, “in line with Polish standards”.Otherwise, reads the statement, “the delisting would be a unilateral decision by the minority shareholder of the company”.Grzegorz Chłopek, chief executive at ING PTE, told IPE: “We are not generally against delistings, but we would prefer they be done according to regulations in place in Poland. GCH wanted to use a legal loophole.”Under Article 91 of the Act on Public Offering, delistings require the approval of four-fifths of the shareholders, but the Act only applies to domestic companies and foreign companies with dual listings.Of the 51 foreign companies listed on the WSE’s main and parallel market, 22 have single listings.Where the Act does not apply, the ‘Warsaw Stock Exchange Rules’ come into force, but these do not specify a qualified majority.On 13 March, the WSE’s management board issued a communiqué stating that the delisting process of single-listed foreign companies should proceed on the same terms as that defined in Article 91 of the public offering act.According to Chłopek, the WSE’s communiqué was a positive step, as all quoted companies would now require 80% participating shareholder approval.“Otherwise, minority shareholders could be forced to sell their shares at a much lower price than the company’s book value,” he said.“However, the most important issue is not the share price, but that all companies should respect the same law.”Which law applies could be a moot point.On 23 March, GCH filed a delisting application with the WSE, citing Dutch legal grounds. Poland’s pension funds have once again flexed their muscles to protect minority shareholder rights in a case complicated by legal uncertainties in Polish share listing regulations.The investment at stake is Global City Holdings (GCH), an entertainment and real estate company, which floated on the Warsaw Stock Exchange (WSE) in 2006.The WSE is the Dutch-registered company’s sole listing.The largest single investor is Israeli-based IT International Theatres, with a 53.9% shareholding, while five Polish pension funds hold between them 26.6%.
“I am delighted Björn is joining us and will bring his extensive experience in long-term investing and leadership to the Fund,” Arndt said.“Bringing together different investment perspectives is enormously important to how we run the portfolio, and Björn will be a great addition to our thinking.”At the Future Fund – which manages assets to pre-fund pension liabilities in addition to looking after funds devoted to the future financing of medical research, hospitals and school construction – Kvarnskog will oversee a listed equity portfolio worth AUD39bn, split between Australian equities and holdings in global and emerging markets.Prior to his seven years at AP4, he was head of European equities at DNB NOR Asset Management, which he joined in 2005 after five years as senior portfolio manager at AP3.He has also worked at Handelsbanken, Alfred Berg and JP Bank. Sweden’s AP4 has lost its head of global equities to Australia’s AUD118bn (€73.2bn) sovereign fund.Björn Kvarnskog joined AP4 in 2008 and in June took a sabbatical from his role to complete a degree in business administration.He will move to Melbourne in 2016 and become head of equities at the Future Fund, also joining the sovereign fund’s investment committee.The Future Fund’s CIO Raphael Arndt said Sarah Carne, director of equities, would continue as interim head of equities until Kvarnskog’s arrival.
During the interview, Knot suggested that offering fewer guarantees could “create space” for pension funds to increase investment risk.“If they promised less certainty, pension funds could increase their investment risk and be more likely to deliver better returns,” he said.He said pension funds should be given “leeway” for just such an investment policy, adding that a guarantee should be given only to older participants “who need to know what they can expect at retirement age”.The regulator’s recognition of the problems facing the Dutch pension system echoed similar statements made recently by Gerard Riemen, head of the Dutch Pensions Federation.Last week, Riemen advocated a new collective defined contribution (CDC) system and argued that an “indication” about a future pension level should replace the current defined benefit promise of a “certain” pension.“We should tell a 55 year old how much his currently accrued pensions assets are likely to deliver in future benefits,” he said.“However, the honest answer to a 35 year old should be that we can’t properly estimate the future pension yet.” Klaas Knot, president at the Dutch financial regulator (DNB), has conceded that the country’s pensions funds can no longer guarantee younger participants their future pensions.Speaking on the ‘Buitenhof’ TV programme over the weekend, Knot concluded that guarantees should be limited to older participants.“Offering guarantees to a participant who has just started paying contributions is over the top,” he said.“Due to the huge cost of providing certainty, [in light of] low interest rates and an ageing population, we simply can no longer afford this.”
Generali Investments is to push ahead with its expansion into the UK and Nordics after the company’s board approved the launch of a London office to cater to pension fund clients.The Italian asset manager’s intention to move into the UK and three Nordic markets – Norway, Denmark and Sweden – comes amid a push to grow third-party assets under management (AUM) from its current €17bn, a fraction of its overall €431bn, largely managed on behalf of the firm’s parent company, Italy’s largest insurer.Santo Borsellino, chief executive at Generali Investments, said the move into the four new markets was necessary to be seen as “serious” in the institutional asset management market.“We can not avoid being in core markets, like the UK and the Nordics, where historically we have not been present,” he said. Approval for its expansion into the new markets – away from its presence in Italy, Germany and France – was granted by the Bank of Italy late last year.Borsellino said the manager’s board in January signed off on the launch of a dedicated office in London, with a business plan currently being drawn up by the company’s head of sales and marketing, Andrea Favaloro.The Nordic countries and the UK were identified due to their concentration of institutional assets, and specifically their “developed” second-pillar pension systems, Generali Investments said.Favaloro added during an event in London that it was important to be seen as a “reliable partner” for UK pension investors and identified the growth in the defined contribution (DC) market as an opportunity for Generali to grow third-party assets.Borsellino said that the company’s current €17bn in third-party money amounted to growth of 16% year on year, and that it was now targeting an additional €8bn in assets by the end of 2018.Asked whether acquisitions could be one way to grow third-party assets, Borsellino said the company preferred organic growth over acquisitions.But he noted that the current market environment would nevertheless present “opportunities” for deals to buy other market participants.
The German-speaking countries of Europe, despite having very different pension systems, still face a similar problem – how to explain why people’s pensions might not be what they expected.At this year’s IPE Conference in Berlin, representatives from the pensions industries in Germany, Austria and Switzerland updated delegates on the latest debate issues in their respective countries.Heribert Karch, managing director at Germany’s MetallRente and chairman of the aba pension fund association, said his country was at a very important point of its ongoing debate. “It is the last remaining chance to enter into a new world in which occupational pensions is no longer just a benefit offered by employers but a part of an integrated social policy,” he said. The government’s current draft allows social partners to set up pension plans without guarantees.“The draft is extremely good work by the ministry,” Karch said.“This way, social partners – the so-called Tarifparteien – can do something for the companies, ridding them of the financial burden of top-up payments, and they can do something for the unions, offering them a say in how pension plans are set up.”“But what some people in Germany do not want to see is that this needs to be done without guarantees, to offer pension vehicles a wider choice of investments.”Christian Böhm, managing director of the Austrian APK pension fund, said low interest rates could damage the reputation of funded pensions in Austria even further. “The current interest-rate environment could jeopardise the momentum we already had in convincing people about the necessity of second-pillar pension savings,” he said. He pointed out, however, that replacement rates from the first pillar continued to shrink from each generation to the next and that only 25% of employees in Austria were now covered by a second-pillar pension fund.He added that some of the contribution rates were “very inadequate”, especially in the public sector, where saving into a second-pillar scheme is mandatory.“A 0.75% contribution rate is rather pitiful,” Böhm said. “Only companies that see pension funds as a competitive advantage are paying appropriate contributions.”Ueli Mettler, a partner at Swiss researcher c-alm, said the Swiss get an equivalent of 60% of their final salary via the second pillar and just 20% via the first.But while almost all pension plans have been switched from defined benefit models to something similar to defined contribution, there is still a level of guarantee in the system in the form of the conversion rate, he said. This is applied to the accrued assets and has to be guaranteed for life.Under the new AV2020 reform proposal, this rate is to be cut from 6.8% to 6%.“A consensus can be reached on this part of the proposal and on the slight increase of the retirement age to 65 for both male and female employees,” Mettler said.“But the real debate is now around the compensation for these cuts in the second pillar and whether there should be a general top-up on first-pillar pensions.”
Snijder – who became acting chair after Stan Hoovers died early last year – has the support of the majority of the pension fund’s accountability body.However, in a letter to the pension fund’s participants, BPVT chair Peter Czaikowsky, accused SPT’s board of wanting to curtail the reach of the occupational association, including its ability to appoint, suspend, and dismiss board members.According to Czaikowsky, an independent survey had made clear that this was legally impossible.In the opinion of the BPVT, SPT’s board didn’t sufficiently co-operate in finding a successor for Hoovers, after it had nominated dentist specialist Han Bakker for the position, bypassing Snijder who was also a candidate.Snijder, however, argued that SPT’s board didn’t support the association’s nomination, “as Bakker lacked experience as a pension fund trustee, and an appointment wouldn’t have received approval of supervisor DNB”.He added that he wasn’t bothered by not being the association’s first choice as chairman.As a result of the settlement, Bakker will join the board as a candidate trustee as of 1 July and will receive a fast-tracked education for chairmanship as of 1 January.In addition, the board of the dentists scheme will be extended with a fifth trustee to start as of 1 October.Both parties have agreed that they would try to solve their dispute about the role of the BPVT within a year, and that the occupational association “in principle” cannot fire board members.The settlement, however, doesn’t address the BPVT’s objection to the pension fund’s decision to increase the annual fixed increase of pension rights from 0.85% to 1.15%.Czaikowsky claimed that SPT had changed its rules unilaterally and without the required permission of the occupational society. In his opinion, the indexation rise would increase the likelihood of future rights cuts.SPT chair Snijder, however, suggested that the BPVT didn’t properly understand the issue, pointing out that the increase followed an asset-liability management model based on the legally allowed parameters for expected returns.“Last year, we had surplus returns of more than 2%,” he said. The €1.9bn Dutch pension fund for dentists (SPT) and its occupational association (BPVT) have in part settled a dispute about the composition of the pension fund’s board.The settlement came after a legal verdict in a case – brought by SPT at the court in Utrecht – about the exact responsibilities of the association in relation to the pension fund.Occupational schemes, such as for those for dentists, general practitioners and pharmacists, have trade bodies that must reflect support among the occupation for mandatory participation. The associations also have input into pension arrangements.In the opinion of SPT’s board, however, since the closed occupational scheme was no a longer a mandatory one, the legal responsibilities of the association were limited to making nominations for appointments or dismissals of board members, said Meilof Snijder, SPT’s temporary chairman.
The €9.8bn French public sector pension scheme Ircantec is pulling out of the tobacco industry, a decision affecting some €20m of investments.Jean-Pierre Costes, president of Ircantec’s board of directors, told IPE that it made the decision for several reasons, including recommendations from the World Health Organisation, the use of child labour, and the development of disease. The decision was finalised in December.Laetitia Tankwe, adviser to Ircantec’s president, added that the scheme decided that investing in the tobacco industry went against well-known and credible international standards.Ircantec is a pay-as-you-go scheme but has €9.8bn of reserves that it manages according to socially responsible investment principles. Its approach is guided by a desire for its investments to be aligned as much as possible with its values, at the heart of which it has placed inter-generational solidarity. It has already implemented exclusion policies in the past, such as with respect to coal, and has also taken action aimed more deliberately at achieving positive outcomes. Late last year it announced an energy poverty initiative.This week it announced an investment of €2.5m in a renewable energy fund, EnRcit. Caisse des Dépôts, the French state development fund and a manager of French retirement schemes such as Ircantec, and Crédit Coopératif, a French bank, also allocated to the fund, taking it to €10m. It aims to support renewable energy projects launched by citizens and local or regional authorities.Ircantec’s divestment from tobacco comes as other institutional investors have decided to turn their back on the industry. Earlier this month Europe’s largest pension fund, €405bn Dutch civil service scheme ABP, announced that it would divest its entire holdings in tobacco and nuclear weapons – worth an estimated €3.3bn – following extensive consultation. In October 2017 the €25bn Dutch industry-wide pension fund PGB announced that it would no longer invest in tobacco.2017-2020 objectivesIn December, after a negotiation lasting several months, a majority of the Ircantec board agreed and adopted a new “objectives and management agreement”. It determines the scheme’s strategy, objectives and resources for the period 2017-2020.This is a period in which retirement activity is anticipated to increase by 40%, including as a result of local elections in 2020. Ircantec is the compulsory supplementary pension scheme for non-state employees and public authorities as well as for local elected officials.The new agreement predicted a 3% reduction in Ircantec’s headcount, and a 4% reduction in administrative management costs, excluding staff costs.According to a statement from Ircantec, the agreement also set out strong objectives for Caisse des Dépôts, which manages Ircantec. The objectives related to the quality of its service, its development of digital services, and its increased involvement in the partnership between France’s mandatory regimes, for example projects led by Union Retraite, which brings together France’s mandatory pension schemes and coordinates projects designed to improve the relationship between schemes and beneficiaries. At the end of last year Ircantec also adopted a shareholder and institutional engagement policy with three priorities: human rights in business, including respect for trade union rights; the ecological and energy transition; and corporate tax liability.
According to DR, the scandal has cost Denmark’s public purse at least DKK12.7bn (€1.6bn).In Germany, Denmark, Belgium, France and Italy, the activity – reportedly carried out by a network of international financiers and involving some of the world’s biggest banks – may have cost these countries’ treasuries a collective €55bn, according to German non-profit newsroom Correctiv, which coordinated the investigation. “A picture is being painted of blatant crimes that must be pursued by the authorities with toughness” – Torsten Fels, PenSamFels posted his comments after speaking in a news report on Denmark’s TV2 channel in the last few days.He said that PenSam had a responsible investment approach that was based on credibility and decency.“We screen for undesirable elements, but we are also dependent on trustworthy cooperation partners,” he said. “A picture is being painted of blatant crimes that must be pursued by the authorities with toughness.”Fels described the investigation as “a wakeup call for the international financial sector”.Reuters, one of the news agencies involved in the investigation, reported last week that authorities in Germany, Denmark, Austria and Belgium had all opened their own investigations into the fraud.According to Reuters, the fraud involved shares being traded between banks, investors and hedge funds to create the illusion of multiple owners, each entitled to a refund on withholding tax charged on stock dividends. The head of one of Denmark’s biggest pension funds has spoken out to condemn a wide-scale tax fraud uncovered by a media investigation.Danish national broadcaster DR, newspaper Politiken and other European media outlets in the last three months have published articles detailing a withholding tax scam – dubbed ‘Cum-Ex’ – said to have cost European governments €55bn.In a comment on social media network LinkedIn, Torsten Fels, chief executive of labour market scheme PenSam, said: “What we see described in the media is the expression of a sick culture and business ethic in a broad swathe of the international financial sector, to which we are deeply opposed.”Fels added: “We will focus even more on accountability and the screening of our investments and partners.”
A consortium of UK local authority schemes has announced plans for a £1.3bn (€1.5bn) emerging markets fund.The Brunel Pension Partnership said in a statement that it would launch a formal tender process in January, but invited managers to be involved “right from the outset”.Mark Mansley, Brunel’s CIO, said: “Emerging markets will be the source of over half of global economic growth over the next 10 years. Emerging markets are also home to a growing number of world class companies as well as interesting niche business able to access particular opportunities.“Undoubtedly there’s great potential here for investment managers able to think long-term and find the best opportunities. We are starting the process of identifying the best of these today.” Mark Mansley, chief investment officer, BrunelThe emerging markets fund will be the third on Brunel’s platform when it opens next year, following the launch of a £1bn smart beta fund earlier this month. It has also made commitments to long-lease property funds run by M&G and Aberdeen Standard Investments.Legal & General Investment Management runs Brunel’s passive mandates as well as the smart beta fund. Consultancy groups Inalytics and Redington will assist Brunel with the manager search and assessment.Brunel is a collaboration between 10 pension funds in the UK’s Local Government Pension Scheme, with combined assets of £28.9bn. The organisation has initially called for strategic research and “thought pieces” from asset managers – but not formal proposals. It has also invited interested parties to register for updates when the full tender process is launched.