UK - The £627m (€730.6m) Highland County Council pension fund will make its first foray into private equity investment with a 5% allocation to the alternative asset class.
The Scottish local authority fund currently has no allocation to private equity, yet following training from incumbent investment consultants Hymans Robertson alongside additional support from an unnamed external investment manager, the scheme will tender for a provider later this year.
Roger Niven, principal accountant for treasury and investments at the Highland council, told IPE: "We have decided to move 5% into private equity following extensive research but we haven't decided on when we are going to the market."
The council considered private equity "an excellent diversifying asset for a small but meaningful proportion of the fund's assets" adding that the asset class was currently attractive in terms of investment opportunity.
The scheme will measure private equity performance on an absolute return basis rather than comparing returns with those from quoted equity returns. Hymans Robertson advised the scheme that "a consistent annualised return in the low teens over the long term" would be achievable.
Niven revealed the council would hold a meeting later this month to decide the details of the new mandate.
In spite of Hymans Robertson's support and ongoing investment consulting services to the Highland pension fund, Niven is investigating hiring additional specialist consultants to assist with the private equity manager search.
Niven said: "Hymans is our investment consultant and it will be involved, but we will be talking about the possibility of hiring other specialists to work alongside them."