The BT (British Telecom) Pension Scheme is to sell 60 per cent of the funds management firm it founded about 35 years ago, Hermes Fund Management, to a US manager for the equivalent of A$451 million. Hermes has a strong Australian connection.
Federated Investors, a predominantly wholesale and retail US manager, is funding the deal with cash and credit and will allow Hermes management to keep about 10.5 per cent of the firm. The pension fund will retain 29.5 per cent. Hermes manages about A$600 billion.
According to Asset International’s ‘CIO’ newsletter, approval has already been granted by the boards of the BTPS and Federated, although further regulatory approval is required in the UK, Singapore, and other jurisdictions where Hermes is based.
Hermes, well known for pioneering ESG investing through an integrated approach across its portfolios, is represented in Australia by Ian Manton-Hall’s third-party marketing business, IMH Squared. Manton-Hall opened the Hermes Australia office in 2010 and then converted his contract to a third-party marketing role, to allow him to also represent other managers.
According to the announcement in the UK last week, upon completion, the asset manager’s board will comprise an independent non-executive chairman and representatives from Federated, BTPS, Hermes’ executive leadership, and two independent non-executive directors, the newsletter said last week.
BTPS chairman, Paul Spencer, said Federated’s values aligned with Hermes and would be beneficial for members.
“Hermes has delivered excellent investment performance and stewardship to the scheme over many years, operating initially as our in-house manager and, in recent years, building on this capability to develop a strong multi-client business,” he said. “This transaction is the next step in the evolution of Hermes, as it continues to expand its global business.”