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Asset management roundup: Dutch pressured on takeover policy

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Asset managers and pension funds have written to Dutch politicians voicing concerns over proposals to change rules for company takeovers.

The International Corporate Governance Network (ICGN) penned the letter to Henk Kamp, minister of economic affairs, and Dennis Nava, secretary of the committee of economic affairs in the Netherlands’ lower house of parliament. It was co-signed by asset management trade bodies from France, Italy, and the UK, as well as major asset managers and pension funds.

It argued that imposing a legal time limit on “hostile” takeovers, as proposed by policymakers, would be “unduly harsh” and would damage shareholder protections “to the detriment of good corporate governance, efficient markets, and sustainable value creation”.

”We believe introduction of such an extreme provision would work against the interests of institutional investors and their beneficiaries – including pension funds and pensioners,” the ICGN said.

“We further believe that this would carry economic disadvantages and put Dutch companies and the Dutch market in an unfavourable light from the perspective of the global institutional investment community… Almost 90% of the shares in Dutch listed companies are owned by institutional investors, many of whom are based outside the Netherlands. Given the size and the open nature of the Dutch economy it is important to maintain the trust of these investors in the Dutch corporate governance system.”

The proposals follow US paints manufacturer PPG’s failed bids for AkzoNobel, a Dutch chemicals firm. The US company made three offers, all of which were rejected by AkzoNobel’s board.

The Universities Superannuation Scheme (USS), the biggest pension fund in the UK and an AkzoNobel shareholder, issued a rare public statement in relation to the third bid in April, calling for “meaningful and constructive dialogue”. USS is a co-signatory to the ICGN letter.

The co-signatories also included the UK’s fund management trade body the Investment Association, and its Italian and French counterparts, Assogestioni and AFG. Individual asset management groups also signed the letter, including Standard Life Investments, Legal & General Investment Management, and Hermes Investment Management.

Kempen absorbs research costs in response to MIFID II

Netherlands-based asset manager Kempen Capital Management will pay its research costs from its balance sheet from January 2018.

The decision relates to one of the key elements of the Markets in Financial Instruments Directive (MIFID II), which requires research costs paid by investment funds to be disclosed. Kempen is the latest European manager to opt to pay its own costs rather than charge these directly to investors.

In a statement, Kempen said that costs could still be passed on “under strict conditions” in the future.

Lars Dijkstra, Kempen’s CIO, said: “We welcome any chance to increase transparency and efficiency in the financial sector. Kempen has always invested heavily in both the quality and quantity of our internal research system. This makes us less dependent on external research service providers.”

Other groups to have taken this route include UK-based Jupiter Asset Management, M&G, and Woodford Investment Management.

Private equity demand pushes down fundraising periods

Private equity managers are spending on average just 12 months raising capital for new funds, compared to 20 months four years ago.

Research by data firm Preqin showed increased demand for the asset class had resulted in managers hitting their targets far sooner. In addition, the average size of private equity funds increased over the same period from $372m (€334m) in 2013 to $625m in 2017.

The research also showed the importance of managers having a successful track record in private equity: nearly half (47%) of funds raised by “consistently top-performing managers” closed within six months of their launch, and 68% of funds launched by such managers since 2013 exceeded their target size.

Christopher Elvin, head of private equity products at Preqin, said: “Much of the capital returned to investors has been redeployed in private equity, as investors seek to fulfil their allocation plans. This has resulted in an extremely active fundraising environment in which fund managers are seeking to capitalise on huge investor demand for funds.

“However, it is clear that while investor appetite is high, it is also primarily focused on established fund managers with a successful track record. Fund managers that have previously raised significant amounts of capital are likely to be able to do so again, while firms which consistently perform well can raise vehicles far more quickly than the industry at large. For smaller fund managers, or those which have yet to build a track record, fundraising can remain a lengthy and difficult process.”

Permira closes €2.1bn private debt fund

Permira Debt Managers has raised €1.7bn from pension funds, insurance companies, and family offices for the final close of its third direct lending fund. With leverage, the fund has €2.1bn to invest in European credit markets.

The Permira Credit Solutions III fund aims to take advantage of “a significant funding gap” leading to a “strong demand for alternative sources of finance”, the group said in a statement.

The fund first closed in December, and has so far invested €660m in companies across Europe, including Benelux medical equipment distributor Duomed, UK private members club Soho House, and German auto parts manufacturer Reutter Group.

Thomas Kyriakoudis, Permira Debt Managers’ CIO, said the fund was now more than 30% deployed with a “strong” pipeline of potential investments.

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