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Impact Investing

IPE special report May 2018

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Dutch roundup: Kempen wants to make UK 'second home market'

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Kempen Capital Management (KCM) wants to make the UK its “second home market” and further expand its services, after successfully completing the transition of the British clients of MN.

In its annual report for 2016, the €38bn Netherlands-based asset manager said it had appointed a managing director as well as a sales team for investment strategies for its London-based operations.

The team has been tasked with focusing on investments and fiduciary management, KCM said.

Last month, Kempen expanded its fiduciary team with the appointment of four members from Altis Investment Management.

KCM took over UK operations from MN in 2015. At the time, MN managed almost €11bn of UK pension assets, of which €3.5bn was in a fiduciary context.

KCM said all clients had decided to stay, and that it had sealed a new €120m fiduciary contract since the deal.

Kempen further made clear that it expected to start offering multi-asset and European high yield credit strategies this year. The company said it also planned to increase its focus on long-term investments, and has expanded the distribution of existing investment strategies in France and Germany.

In other news, the €1bn pension fund of engineering firm Arcadis said that it was considering placing its pension plan with a general pension fund (APF) and that it was assessing proposals from three commercial players.

On its website it made clear that its non-professional board and 10-strong pensions bureau were nearing their limits in an increasingly complicated regulatory and investment environment.

It said that an APF could offer the expertise as well as cost benefits of a larger organisation, while still giving Arcadis sufficient control over its pension payments.

According to the scheme, it deliberately opted for a general pension fund of a commercial player “as setting up an APF with other pension funds would be expensive and take a lot of time, while co-operation with other schemes has seldom turned out to be successful”.

If joining an APF turned out not to be feasible for the Arcadis scheme, the board said it would consider further professionalising its staff and outsourcing more functions as a temporary alternative.

Astrid Roelofs, the scheme’s director, said that, for example, its pensions administration and other parts of asset management could be outsourced.

She also said that the pension fund is currently assessing how its illiquid investments could be transferred to an APF without additional transition costs or a forced sale.

Last year, the pension fund contracted out management of its interest and inflation hedges to Cardano, citing “complicated management of derivatives following the European Market Infrastructure Regulation”.

Finally, the €205bn asset manager PGGM said it had invested €150m in the construction of two huge and and sustainable distribution centres in Japan, in a co-investment with e-Shang Redwood (ESR).

The decision came in the wake of a €200m investment in the purchase of similar objects elsewhere in the country.

The most recent investment involved logistics buildings in the urban areas of Osaka and Tokyo.

PGGM said the investment was in anticipation of a “very dynamic” market for both logistics and e-commerce in metropolitan areas, with a shortage of modern quake-proof facilities.

In Japan, ESR is an important player in developing, constructing, and managing logistical property. The company also targets China.

Guido Verhoef, PGGM’s head of private real estate, said the partnership with ESR “offered its clients direct access to the largest and most modern logistical projects in top locations in Asia with the strongest economic urban areas in the world”.

“The fast urbanisation and growth in e-commerce lead to a strong increase of consumption as well as logistical innovation,” he added. “This offers great investment opportunities for the long term.”

According to PGGM, the projects were of a new and “very sustainable” generation, with their energy needs largely generated by solar panels on the roof.

As a consequence, carbon emissions would be 80% lower than average in the sector, the pension manager said. In addition, because of the solar panels’ shade, energy costs could be limited by 20%.

PGGM also said that the concrete and asphalt used for construction would large be recycled material, and that rain water would be captured and re-used.

Thijs Schoenaker, PGGM’s director for private real estate in Asia Pacific, said that both projects would generate an “attractive return”.

So far PGGM – the asset manager for the €185bn healthcare scheme PFZW – has committed €736m in total to its strategic partnership with ESR.

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