UK - The Hampshire local authority pension fund will see some of its alternative investment mandates managed by Aberdeen Asset Management in the near future, as troubled former supplier Bramdean Asset Management has signed a deal to hand over control of its alternatives arm.
Bramdean Asset Management, which was associated with Bramdean Alternatives Ltd, hit the headlines last year when it was revealed that the company had invested with Bernard Madoff - convicted earlier this year for a $50bn (€33bn) Ponzi scheme fraud.
The impact this had on Bramdean at that time also hurt the assets held by the £4.1bn Merseyside pension fund and the £2.7bn Hampshire County Council pension fund, as Merseyside holds a small allocation to Bramdean through an internally-run UK equities portfolio and Hampshire had assets in the alternatives company. (See earlier IPE story: Madoff fraud hits pension funds)
Officials at Bramdean Alternatives - who replaced the previous board of directors five months ago - have now agreed a deal between Aberdeen Asset Managers and Bramdean AM, which will see Aberdeen become its investment manager instead of Bramdean AM.
Aberdeen has paid an undisclosed sum for the three-year contract, and has agreed a consultancy deal with BAM for 12 months, to transfer the assets and mandates to Aberdeen as well as rebrand them.
The arrangement was negotiated with the support of pension funds and investors - including Hampshire - according to a spokesman for Bramdean, as it needed at least 75% of the shareholder vote and achieved 95%.
Aberdeen AM is already a key asset manager for Hampshire as it was assigned a mandate in 2007 to look after £200m of its low-risk active equity strategy. (See earlier IPE story: Hampshire appoints seven new managers, looks into hedge funds)
That said, the move is likely to require some work from Aberdeen as figures released today showed Bramdean Alternatives Ltd is now overcommitted to private equity and specialty funds, as it has agreed to invest as it had commitments of $216m by the end of September 2009, while its total net asset value was $187m to the end of that period thanks to write-downs from the Madoff affair and to private equity funds.
Jonathan Carr, chairman of the alternatives company, claimed its investments had fared relatively well as it had low exposure to "mega buyout funds" and private equity real estate funds. He also predicted the private equity market will improve,even though the sector returned 7.49% in six months, as revaluations are likely to rise.
The alternatives offering targets between 30% and 60% in private equity funds and direct holdings, while 15-45% can be placed in hedge funds, and between 10% and 30% could be invested in real estate, infrastructure, natural resources and structured finance funds, according to today's six-month update report.
BAM also earned a fee of over $1.3m as investment adviser to Bramdean Alternatives between April and the end of September, as officials figures showed BAM earned one-twelfth of 1.5% NAV from its contract.
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