Home ListingSeptember 11, 2015

National Grid Sells In-House Manager to LGIM

The UK pension announces the sale of Aerion Fund Management, which runs three-quarters of its portfolio.

Reported by Featured Author

Legal & General Investment Management (LGIM) has bought the in-house fund manager for the National Grid UK Pension Scheme, the two parties confirmed today.

Aerion Fund Management runs £13 billion ($20 billion) on behalf of National Grid—more than three-quarters of the pension’s total assets. All assets will transfer to LGIM by the end of the year, including fixed income, equity, and liability-driven investment mandates.

The pension will create an “executive office” to oversee the management of the mandates by LGIM. This will be led by new CEO Rob Schreur, who joins on November 1 from Philips Pensioenfonds in the Netherlands.

Nigel Stapleton, chairman of the pension’s trustee board, said the transition away from in-house management was “a carefully considered decision that we could not avoid making”.

“In terms of its culture, key competencies, and the commercial terms offered to us, the trustees believe that LGIM can serve our future needs extremely well,” Stapleton added. “These new investment governance arrangements do, therefore, provide an effective and robust model, operating in the best interests for our members.”

A joint statement released by LGIM and the National Grid pension said the new arrangement would “enhance the risk-return profile of scheme assets and minimise the operational risks involved in transitioning to a significantly different investment governance structure”.

The pension will retain the ability to bring assets in and out of the LGIM-managed mandates. The two parties said transfers out would be allowed “under certain circumstances and subject to satisfying a minimum fee requirement that the Scheme is making to LGIM”.

National Grid first announced the sale of Aerion in May, as part of a major overhaul of the pension’s investment strategy.