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Legal & General to manage £13bn National Grid assets

17 September 2015

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A long-term strategic partnership between National Grid UK Pension Scheme and Legal & General will oversee £13billion of assets.

The scheme's assets are currently managed in-house by Aerion Fund Management but going forward Legal & General Investment Management (LGIM) will manage mandates for the Scheme in fixed income, LDI, and equity asset classes.

As part of the partnerships, LGIM will acquire 100% of the share capital of Aerion.

Scheme chairman Nigel Stapleton said now it is the right time for them to move away from in-house asset management.

He said: "Aerion has served our Scheme well over many years and moving away has been a difficult strategic decision for the Trustees."

"However, the increasing maturity of the Scheme and evolution to our investment strategy meant it was a carefully considered decision that we could not avoid making and we now look forward to a long and successful strategic relationship with LGIM."

Stapleton added that LGIM's culture, key competencies, and its commercial terms were best suited to the Scheme's needs.

He said: "These new investment governance arrangements do, therefore, provide an effective and robust model operating in the best interests of our members."

The announcement is in line with the Scheme's objectives, announced on 28th May this year, to procure the best possible outcome for all Scheme members.

It will enhance the risk-return profile of Scheme assets and minimise the operational risks involved in transitioning to a significantly different investment governance structure.

In parallel with LGIM strategic partnership, the Scheme will create a small executive office of pension and investment specialists to support the Trustees in the management of the portfolio.

The executive office will be headed from 1st November by Rob Schreur, currently CIO of Philips Pension funds.

LGIM will also provide total portfolio solutions to the Trustees through the executive office.

The transaction is expected to be complete before the end of the year and is subject to regulatory approval.

Mark Zinkula, CEO of LGIM, said: "LGIM is well-positioned to manage the many different investment strategies, not only for the Scheme's needs today, but also as its asset management requirements change over time."

First published 17.09.2015

Lindsay.sharman@wilmingtonplc.com