Barnet to explore limits of pooling obligations in LGPS ‘test case’
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London Borough of Barnet has delayed a decision on transferring a direct lending mandate of up to £40m to the London Collective Asset Vehicle (LCIV) pool.
In what it is describing as a “test case”, the council has asked its pensions investment adviser, Hymans Robertson, to assess the merits of the move.
Councillors this week voted to carry out the analysis because the council is understood to be happy with the mandate’s current manager, Alcentra.
George Bruce, treasury manager at the council, told Room151: “We have asked Hymans Robertson to do analysis on the CIV’s selection process to assure ourselves that the manager they have chosen meets our requirements.
“This is a test case to take a look at the CIV processes.
“We are mindful of our pooling obligations but we have a very high quality manager and if not for pooling we would be recommitting to them.”
Barnet’s current investment in the Alcentra Clareant European Direct Lending Fund has reached the end of its mandated investment period.
The council’s pension fund committee had been due to vote this week on whether to recommit to the Alcentra fund or whether to instead transfer between £30 and £40m to a private debt fund run by LCIV.
But now, Hymans will carry out its analysis in time for a meeting of the council’s pension fund committee in January, when a final decision will be made.
The outcome of the analysis could also determine the fate of a number of other mandates invested by the council.
At present, Barnet has seven credit mandates, which could be transferred to LCIV – with three identified as suitable for a multi-asset credit fund, and three more to the private debt fund.
A report to councillors this week said: “Work is ongoing to determine the extent of the match and whether switching will involve a change in structure, risk/return expectation or quality of manager.”
At present, Barnet has transferred £127m of holdings in the Newton Real Return fund to LCIV. In addition, fees for its £463m of Legal and General investments were negotiated by LCIV.
The LCIV currently has 14 funds available for investment, covering equities, multi asset and fixed income/bonds. Another four fixed income funds are due for launch or awaiting their first client.
Three additional funds, one each for infrastructure, property and equity are also expected to follow shortly.
In April, in a separate move, a group of five London LGPS funds agreed to create their own pooled private debt fund, outside of LCIV.
Last year, LCIV undertook a series of governance reforms after a review found a “pernicious” lack of trust among member funds and earlier this month, it launched the search for a permanent chief executive to replace interim Mark Hyde-Harrison.
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