Britain’s Environment Agency Pension Plan has awarded a keenly fought-over real assets investment advisory mandate to Cleveland, Ohio-based The Townsend Group, which opened an office in London in 2009.
Some 25 firms submitted formal expressions of interest to advise the UK investor on making £250 million (€291 million; $382 million) of investments in property, infrastructure, forestry and farmland. The pension fund sought a group with the discretion to advise on making the full gamut of investments including commitments to funds, separate accounts, co-investments and joint ventures.
The mandate win followed a decision by the Environment Agency Pension Plan to issue a request for proposals (RFP) last November when it stated its preference was to invest in real assets like energy efficient buildings, renewable energy projects, public transport, water treatment facilities, eco-friendly farming, and sustainable forestry.
That RFP was issued after the pension took a decision to increase its allocation to real assets from 5 percent to 12 percent along with making other allocation alterations for its 2012 to 2014 strategy.
The Environment Agency is a high-profile investor that invests on behalf of members of the former Water Authorities Superannuation Fund. It is one of the largest pension funds in the UK with around 22,000 members and assets of around £1.8 billion.
Its strategy recently has been to reduce its public equities portfolio, reduce index linked gilts, maintain private equity at 5 percent, increase corporate bonds, and increase alternative real asset investments via sustainable property (5 percent), infrastructure (3.5 percent), and farmland/forestry (3.5 percent).
The Environment Agency is a public body created to protect and improve the environment, and promote sustainable development. Accordingly, the fresh mandate contained a requirement that advisors could show a commitment to responsible investment and assess environmental impact.
The Townsend Group is among 1,180 asset owners, investment managers and service partners that are signatories to the Principles for Responsible Investment co-founded by the European Commission to encourage socially responsible investing. The Townsend Group was also helped by having already established a track record in all four asset groups within ‘real assets’, though this is the first time the group has won a discretionary investment management mandate to combine all four.
“We are delighted to appoint Townsend for this mandate to invest in real asset funds on our behalf in accordance with the EAPF real asset investment guidelines,” said Howard Pearce, head of environmental finance and pension fund management at the agency.