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IPE special report May 2018

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UK Kay investor forum 'desperately needs foreign institutions'

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The UK Kay Review’s proposed investor forum desperately needs to involve overseas investors in its activities to succeed, according to the chairman of the working group charged with its launch.

Baillie Gifford partner James Anderson stressed it was important for the forum, once it got underway, to attract sovereign wealth funds, as UK investors’ “dreadful” diversification away from domestic holdings meant they would need the help of overseas investors to make the forum viable.

“We desperately need the involvement of foreign institutions if we’re going to make a difference,” he told a National Association of Pension Funds (NAPF) stewardship conference earlier this week.

Anderson, who chairs the investor working group on collective engagement launched by the NAPF and its insurance and asset management counterpart associations in March, said its report on the matter would be published in early December.

He added that the working group was “really proud” to have secured the cooperation of a number of large asset managers and owners so far.

“We’ve involved some of the biggest American fund managers, who are intensely good at what they are doing and very serious people,” he said.

Anderson, who was also an adviser to the Kay Review board, further noted that the group was currently building relationships with overseas sovereign wealth funds, which would become “really influential in the group”.

“None of us in the group has any notion at all that we want to exclude asset owners,” he said, “and any contribution is deeply welcome.”

He insisted the investor forum would focus on engagement and not be a platform to “bash companies around”.

“The phrase that comes to my mind is that we need to be consistently engaged, rather than occasionally outraged,” he said. 

Chris Hitchen, chief executive of RPMI and a fellow Kay Review adviser, meanwhile told delegates the implementation of the report’s recommendations would likely be a 30-year project.

“That isn’t to say we should be complacent,” Hitchen added.

Asked by NAPF chief executive Joanne Segars if the industry had the luxury of time to implement the Kay Review in light of legislative proposals on shareholder voting under discussion at the European Commission, Hitchen added: “Well, I’m not saying we shouldn’t make haste. We have to work very hard at this – it’ll take a long time to change the Western world’s financial system, frankly.”

He added: “In this endeavour, the UK government is trying to be our friend – I suspect also the EU government.”

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