MLIM to run €12bn Philips pension assets
NETHERLANDS – Electronics giant Philips is to outsource the management of its €12bn in Dutch pension assets to Merrill Lynch Investment Management in a move that will see 55 staff transfer to MLIM.
Merrill Lynch said it was in the final stages of negotiation to buy Philips’ pensions and asset management businesses, known as the Pensions Competence Center and Philips Investment Management.
And Philips would also transfer pensions management and administration to Hewitt Associates. Financial terms of the deals were not disclosed. The deals need approval from Philips’ work council.
Philips said in a statement: “The Board of Trustees of Philips Pension Fund fully agrees with both these transactions.”
“The transaction will include a seven-year contract to manage $16bn on behalf of the Philips Pension Fund in the Netherlands,” Merrill said in a statement. The Dutch scheme covers 64% of Philips’ total pension benefit obligation, according to the company’s annual report.
Paul Howes, general manager for Hewitt in the Netherlands, said: "This acquisition makes Hewitt a leading pensions administrator in the Netherlands, the second biggest pension market in Europe.
“The trend towards outsourcing of pensions administration will continue and through this acquisition Hewitt is well positioned to serve other Dutch pension funds.”
The deal ends a period of uncertainty for the businesses. The competence center was formerly known as Schootse Poort, which said last summer that it would not take on further third-party clients.
And Lars Dijkstra, the Philips scheme’s head of investments, left in February.
“This acquisition will make Merrill Lynch Investment Managers the largest non-domestic active manager in the country and will also give potential Dutch clients a true alternative to local managers,” said Robert McCann, vice chairman Merrill’s wealth management group.
The deal to buy the Eindhoven-based businesses is expected to complete in the third quarter of the year and they will operate under the MLIM name.
The competence center runs €1.5bn for other clients, which are mostly Philips associated companies but which are not included in the seven-year deal. Merrill said it would be talking to them today. Merrill said it will keep the Eindhoven office open.
And it added it could use the deal as a template for similar solutions for other Dutch, UK and US pension funds.
“We are very pleases to have found long-term strategic owners for our asset management activities,” said Philips’ chief financial officer Jan Hommen.
“The transaction should enable Philips and PPF to benefit from world-class expertise, and allow us to capitalise on our earlier investments in the business.
“The transaction will also open new and interesting career opportunities for PPCC’s staff.”
Earlier this month Philips said the Dutch scheme had massively increased its fixed income exposure in a bid to cut its sensitivity to interest rates.
The businesses were sold in a competitive process arranged by Putnam Lovell NBF Securities.