LGIM to buy UK National Grid scheme’s £12.8bn in-house manager

first_imgThe £17bn (€24bn) National Grid UK Pension Scheme has agreed to sell its in-house asset manager to Legal & General Investment Management (LGIM), IPE understands.The pension fund for the UK’s electricity network operator invests 75% of assets (£12.8bn) with Aerion Fund Management, an entity wholly owned by the scheme. Aerion employed 27 fund management and 12 administrative staff as of March 2014, according to its financial statements. Its total salary and related costs were £9.1m.In May the National Grid scheme announced an attempt to sell the asset manager after changes to its investment and governance model, which would include a transfer of assets and investment staff. Sources close to the deal informed IPE that after also holding discussions with BlackRock and BMO Global Asset Management, the scheme is set to sign a deal with LGIM in the coming days.National Grid’s decision to sell Aerion was based on the investment profile of scheme, as its liabilities matured.Nigel Stapleton, chairman of trustees for the scheme, told IPE in May that given the ageing membership the scheme’s liability management was becoming more complex and it required more specialist liability-driven investment (LDI) solutions.LGIM is the largest pension asset manager by AUM in the UK with £644bn in third-party institutional assets, according to data compiled by IPE, and is the largest provider for LDI solutions, according to KPMG.It is not yet clear under what terms LGIM would take on Aerion, or how long the scheme will commit to any potential LDI mandate as part of the sale.The National Grid scheme’s remaining 25% of assets are managed externally, mainly for property, private equity and emerging markets.The fund has appointed a team to support the trustees with monitoring of external managers, investment strategy and liability management.The team will report directly to the trustees, focusing on the scheme’s needs on a full-time basis.Fenchurch Advisory, an asset manager buy-and-sell specialist, is advising on the sale.The National Grid UK Pension Scheme and Redington, its adviser, would not comment on ”market speculation”.LGIM declined to comment.last_img

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