USS Pilots New Investment into Heathrow Airport

(October 22, 2013) – The Universities Superannuation Scheme Limited has agreed to acquire 8.65% of FGP Topco Limited, the holding company which owns Heathrow Airport, for £392 million.

The investment, arranged by USS Investment Management (USSIM)—a wholly owned subsidiary of USS and its principal investment manager and advisor—will form part of USS’s infrastructure portfolio and is its largest investment in UK infrastructure to date.

USS has long been attracted to infrastructure, saying it was well suited to its inflation-linked liabilities.

Chief executive of the USSIM —and aiCIO Power 100 member—Roger Gray explained that he believed investment in UK infrastructure was a “win-win” for investors, promoting economic growth and jobs while providing attractive investments for the trustee board in meeting its commitments to members.

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“This transaction represents a long term investment by USS in the future of London and the UK,” he added.

USS is one of the UK’s largest pension funds, with almost £40 billion in assets. The fund won the asset allocation category at aiCIO’s European Innovation Awards in May.

USS isn’t the only one banging the drum for UK infrastructure: Earlier this year, Pension Insurance Corporation urged the UK government to rethink how it is selling infrastructure investment opportunities, and to set up a specialist investment bank to help.

Mark Gull, co-head of asset and liability management at Pension Insurance Corporation, said at the time: “Risk free yields have been explicitly forced down by policy, pushing up pension liabilities. The government should now seek to increase the supply of suitable risk assets to help trustees support their pension liabilities.

“Ultimately, what is required is a major shift in the government’s understanding of investors’ requirements.”

Jim Leech will serve a three-year term as the Canadian university’s highest officer following his retirement from the C$129.5 billion fund this December.

(October 21, 2013) — Ontario Teachers’ Pension Plan President and CEO Jim Leech has been appointed chancellor of Queen’s University in Kingston, Ontario.

Leech announced his retirement from the C$129.5 billion fund in April after serving as its head since 2007. He had joined Ontario Teachers’ 12 years ago to lead its private capital department after working as president and CEO of Unicorp Canada Corporation.

The outgoing CEO will begin his new role on July 1, 2014 for a three-year term.

“Jim Leech is a highly accomplished business leader and an alumnus with a long history of service to the university,” Daniel Woolf, Queen’s principal and vice-chancellor, said in a statement. “Queen’s will benefit immensely from his extensive experience and I personally look forward to working with him over the coming years.”

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The chancellor is Queen’s highest officer, but the university stated, a largely ceremonial position. Leech will preside over convocations, confer degrees, and lead annual meetings of the university council. He will also be a voting member of the university’s board of trustees.

“I am honored by this opportunity and look forward to being even more involved in the life of the Queen’s community, which brings extraordinary people together to do extraordinary things,” Leech said.

Leech will be leaving the pension plan in tiptop shape—the fund’s assets under management have almost doubled since his appointment, aided by 10-year returns of 9.6%.

“Returns earned above our benchmark directly support the goal of pension security and demonstrate the value of our approach to active investing,” Leech said. “The investment team successfully navigated significant risks and turmoil in the global economy again in 2012 to earn an excellent rate of return.”

Ron Mock, Ontario Teachers’ current senior-vice president for fixed income and alternatives, has been tapped to succeed Leech as president and CEO on January 1, 2014.