The London Collective Investment Vehicle (CIV) has been two years in the making, borne out of the rejection of an outright merger of the capital’s 34 Local Government Pension Scheme (LGPS) funds. Sebastian Cheek chats to chief executive Hugh Grover as the vehicle prepares to launch its first fund.
“There is no reason why the rest of the LGPS cannot invest in the future. We are an open fund so we are open to any qualified investors.”
Hugh Grover
What is the London CIV?
We are setting up a full scope fund manager using the authorised contractual scheme (ACS) structure. This structure means we will be an authorised fund manager with an authorised fund underneath. That fund will be an umbrella fund under which we will have a range of sub-funds each run by a delegated fund manager covering different asset classes and strategies. By the end
of launch we will have four managers and nine sub-funds: six will be passive equities; two will be active global equities and one diversified growth fund. Beyond that, we will grow out with whatever the boroughs want us to put on the platform. We will be authorised to invest in any asset class so we will quite quickly move into fixed income and undoubtedly in the future we will look
at property, private equity, etc. Basically, you name it we are likely to be looking at it.
How did the CIV develop?
This journey started back in 2012 when there was the first talk about merging all the London borough funds. The boroughs were not keen on that so they asked London Councils to look at what could be done to generate the benefits of a merger but without actually merging. We did a lot of research and came up with the proposal to set up the CIV as an authorised contractual scheme. We put final proposals to the boroughs in February last year and they then took decisions to enable us to set up the company and put in place the governance structures.
How many of the London boroughs are signed up?
We are owned by the London boroughs who are our shareholders. At the moment we have 29 boroughs and the City of London signed up, so 30 out of a possible 34, and we are hoping to have at least one more on board shortly.
Is the vehicle just for London’s funds?
There is no reason why the rest of the LGPS cannot invest in the future. We are an open fund so we are open to any qualified investors. We are focusing on London at the moment to get things up and running, but if any other LGPS want to invest we are more than happy to have a conversation with them.
How are the individual boroughs’ interests represented?
We have a member committee made up of one elected member from each participating authority, which brings all 30 of the bodies together. That first met in December last year and since then the boroughs have been making decisions and we have been finalising details, putting together all the documentation and going through the legal hoops. Each borough will continue to set its own investment and asset allocation strategy and we will just be another route for them to implement those strategies. We are now at the point where our application for the company to be authorised is with the Financial Conduct Authority (FCA) and we hope that will be signed off shortly. They won’t give any indication as to when that will be, but we are a priority application so I hope it will be the next few weeks. The starting gun for getting these sub-funds open is when we get authorised. Our target is to have our first fund open and funded before Christmas. If we get authorised in
the next few weeks we may also launch one or two more sub-funds by Christmas.
Comments