EUROPE - The £15bn Railpen is the first major pension fund to back Governance for Owner's (GO), the new partnership founded by former Hermes directors' Peter Butler and Steve Brown, by investing e200m in the GO European Focus Fund which will be placed in a small number of under performing companies across Europe.
Michelle Edkins, GO’s managing director explained the companies chosen will be listed, with some in the FTSE All Well Developed Europe index.
The criteria for selection is based on consistent five,three, and one year under-performance in companies’ respective peer groups and where there are issues of strategic and corporate governance weaknesses that GO, as shareholders, feel they can promote change.
Edkins said: “The idea is to be between the top five and the top ten shareholders, but equally it’s an important part of the way we operate to work with other shareholders about their concerns to see if we have a take on the situation and often a collective voice is very effective.”
With respect to the risks involved of investing in poor performers, Edkins added: “Its a concentrated portfolio and not index tracked but it’s not an unduly out of character risk.”
Railpen chief executive, Chris Hitchen (pictured), said: “This exciting venture presents us with two new opportunities to create value for our fund. First by strategic investment in European companies where a business transformation is achievable. Secondly by leveraging our long-standing commitment to be a responsible share owner.
The e200m commitment to the European Focus Fund is the biggest single mandate Brown and Butler have won in their eight year partnership.
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