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Chelsea & Kensington invest in private equity

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UK - The £379m (€561m) Royal Borough of Kensington and Chelsea pension fund has started investments into private equity.

The fund’s initial exposure to this asset class will be via Adams Street Partners 2007 Global Fund the investment committee reported in its November meeting.

Earlier this year, the fund, advised by consultants PSolve, had reviewed its asset allocation to include alternative investments. The target is to change the 71.5% equity, 21.5% bonds and 7% cash allocation to 60% equities, 30% bonds, and 5% each in property and private equity.

Between June and September the fund has already allocated £19.9m (4.7%) to the ING Real Estate - OSIRIS Fund of Funds.

The fund cited a reduction in the level of risk to the assets and a stabilization of the Council’s contribution rate as main reasons for the diversification. The scheme’s funding level has increased from 78% (at the last actuarial evaluation in 2004) to 92% in May 2006.

Currently, the fund has two multi-asset managers, Baillie Gifford and Alliance Bernstein, each investing roughly one third of the fund’s assets and Prudential M&G as fixed income manager with a mandate of around £82,000.

Meanwhile, the Borough is looking to outsource the administration of the provision of the local government pension scheme, a spokeswoman confirmed to IPE. In the tender it is looking for “the provision of a comprehensive day-to-day pensions administration and associated services for 3,200 active, 2,600 deferred and 2,100 pensioners and dependent members”. The deadline for participation is 2 January 2007. 

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