THE NETHERLANDS - Philips' decision to hive off its e13.5bn pensions asset management business to Merrill Lynch Investment Managers (MLIM) is sending ripples of discontent across the pension fund, with at least seven people resigning and several more expected to follow.
Two out of a team of five on the equities desk have resigned – Marco van Lent and Richard Speetjens will join as portfolio managers at F. van Lanschot, the Dutch private bank in September. The three remaining managers on the equities desk are understood to be undecided.
There is also a great deal of speculation about how MLIM is actually going to manage the 50 odd people that it will have to absorb once the deal goes through.
Currently, MLIM has around 10 people in Amsterdam and sources said the manager does not need as many as 65 people managing money. Between 10 and 15 is a more realistic number.
Andrew Dyson, head of institutional business at MLIM, EMEA, commented that the acquisition will provide MLIM with a platform for growth. MLIM is to restructure the Philips investment management division by moving the entire equities desk to London, while retaining the fixed income desk in Eindhoven.
“We are not planning any job cuts and we very much hope the people concerned will make the transition to London and Eindhoven,” Dyson said.
“People are unhappy because it’s not clear what is happening and how things are going to develop,” said a source close to Philips.
“Many also don’t want to move to the UK. I won’t be surprised if there are more departures.”
Other departures have been in the back-office and trade support where it is understood that between three and five Philips employees have decided to quit.
The MLIM-Philips deal has stirred a great deal of interest in the Dutch market with many commentators expecting more such deals in the future as regulatory pressures and a tougher investment climate push pension funds to outsource or consolidate.
Under a seven year contract, MLIM will run assets worth e13.5bn that are currently being managed by Philips Investment Management on behalf of the Philips Pension Fund and other external clients.
Merrill Lynch is expected to outsource an estimated 10-15% of Philips’ assets to other third party providers. MLIM currently manages around e7bn of institutional assets in the Netherlands. With this move, MLIM’s total assets under management will rise to around e21bn.
Though the terms of agreement have not been disclosed, MLIM is understood to have paid in the region of e40-50m for Philips’ assets.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.