Agenda item

This item provides the Pension Fund Committee with an opportunity to discuss the still ongoing redemption process of the LBHF Fund’s allocation to Aviva’s Infrastructure Income portfolio, with representatives from Aviva to be present at the meeting.  

Phil Triggs (Tri borough Director of Treasury and Pensions) provided an update and noted that Aviva were unwilling to attend the Committee meeting. However, a payment of £7.2m was made by Aviva on 9^th September 2024.

The Chair enquired about the outstanding value of the redemption. In response Phil Triggs noted that this was approximately £10m and the timeline of when this would be received was unclear.

Phil Triggs explained that officers would continue to apply pressure on Aviva and insist on their personal attendance at all future committee meetings until the outstanding redemption balance was fully settled.

Michael Adam (Co-opted Member) noted that at the last meeting Aviva had provided assurances that they had received legally binding offers and were only awaiting ratification from the NHS Trusts. He requested additional context regarding the delay in receiving the remaining redemption funds. Phil Triggs explained that some signatures had not been obtained as quickly as Aviva had anticipated and as a result, they were still in the process of completing due diligence paperwork to finalise the matter. Officers would ask Aviva to confirm how many signatures were still outstanding and report back to the Committee.

Action: Phil Triggs

Councillor Adam Peter Lang expressed his disappointment with Aviva for not paying the full redemption amount. He emphasised the need for a more robust response to the Committee’s concerns moving forward and recommended requesting a clear, firm timetable from Aviva for the final payment. Phil Triggs noted that he had already responded to Aviva in a robust manner on behalf of the Committee.

Councillor Adrian Pascu-Tulbure  requested that Aviva provide clarification, confirming that the sole reason for the delay was the failure to receive the necessary signatures from the prospective buyers within the expected timeframe.

Action: Phil Triggs

Peter Parkin (Co-opted Member) noted that as a representative of the union members, he was disappointed by Aviva’s absence from the Committee meeting. He asked what additional actions could be taken to apply further pressure on Aviva. In response Andrew Singh (Isio) explained that from his understanding Aviva was currently managing challenges on multiple fronts, including the sale of other assets with the fund. It was noted that Isio believed that the fund was in a better position than most, as it had already received a portion of its monies. However, the delay was deemed unacceptable, and Aviva had missed the expected timeline they initially provided. From Isio’s understanding the situation regarding the sales of assets had not changed, but the process was taking longer than anticipated. He advised that moving forward officers should continue to press Aviva and insist that they remain present at future committee meetings.

Councillor Adrian Pascu-Tulbure enquired how often situations similar to this occurred, where fund managers delayed the payment of redemptions. Andrew Singh (Isio Group) noted that such instances were relatively rare. In in his 18 years in the industry, he had only encountered 3 or 4 cases of managers delaying redemption payments.

Marian George (Independent Investment Advisor) summarised several key learning points. She emphasised that these were illiquid assets and occasionally things do not go as planned and selling illiquid assets was inherently challenging. In the future it would be prudent to include clauses in contracts to address situations where assets were not realised by the agreed end date. Additionally, if there was a change in the management team, it would be advisable to have Isio reassess the new team.

Councillor Adrian Pascu-Tulbure asked for further clarification to be provided on the source of the £7.2m. Phil Triggs confirmed that this amount was generated from the sale of some of the assets.

The Chair summarised the following key points raised by the Committee:

• Going forward to take a prudent approach with regards to redemption terms and conditions.
• With Isio’s support, officers to continue to monitor the legal case with regards to fund mismanagement.
• Coordinate with other investors who were seeking redemption at the same time to ascertain opportunities to coordinate pressure.
• The Chair to prepare a formal letter to Aviva, highlighting the Committee’s expectation for Aviva to attend future Committee meetings.

Action: Phil Triggs

RESOLVED

That the Pension Fund Committee discussed the numerous concerns surrounding the redemption process (Infrastructure Income portfolio).