Interview | Mike O’Donnell
short term before the permanent appoint- ment was made. This now completes the top team, which is important. That post had been vacant for too long.
Priority two was to get out and about and hear from the LLAs on how we were doing and what we needed to do differently. Most of them have recognised that there has been quite a lot of progress. We now have 50% of assets under management or oversight. That is a good starting point, but we need to work out how we move into the next phase of building that to a larger figure. We also need to make sure that we have the
HSBC Bank UK Pension Scheme for more than eight years and working for Prudential/M&G Investments for more than 20 years in a variety of senior invest- ment positions. Mark will lead the investment team and drive fund launches to fulfil the pooling requirements of our clients. His appoint- ment means we have now finished recruit- ing our top team. I’m confident this means we can continue to progress with delivering the current pipeline of fund launches and tackle some of the major investment chal- lenges we face, such as responsible invest- ment and ESG.
agement is what we would be looking at over the next four to five years. So, there will be quite a significant further step in terms of pooling.
Looking at the 12 months, it probably is more about putting foundations in place, such as building out the team and getting those relationships working better. I have talked about the three funds that we are about to launch, so we need to get those launched in the next few months. The next bit of the pipeline is liquid loans, inflation- plus and property. Again, in the next 12 months I would expect to make significant progress on those as well. So, getting those launched is important.
It is always useful to share ideas and
expertise and if someone else has done it, why invent it yourself.
products that they want ready for when they want them. So, hearing from the LLAs about how we engage and resetting, to some extent, our approach to engaging with them was priority two.
Priority three is to launch new products. We have had a few funds in the pipeline for some time, typically infrastructure, private debt and global equity core. We have already submitted two of these to the Financial Conduct Authority (FCA) and infrastruc- ture will follow imminently, so we expect to launch all three of those over the next few months. We have been saying that for some time, but we are now at a point where we are ready to submit to the FCA, so we are con- fident that they will be ready for investment in the next few months. That is important in terms of LLAs having committed some funding to those and infrastructure is one that we have, for some time, been waiting for.
What is Mark Thompson’s brief? Mark has significant experience in the financial services industry, holding the position of chief investment officer at
Mark comes with enormous experience and a focus on ESG, so he will serve as a key player in leading on the long-term sus- tainability of our services and how we can develop our approach to manage risks and foster positive investment outcomes. I’m looking
forward to welcoming Mark
onboard. The role is fundamental to enforce our strategic framework and to suc- cessfully deliver value for our clients.
You have discussed your priorities, but what targets did you set for your first year in the job? Not specific numerical targets. In terms of assets under management (AUM) – which is not what we fixate on – it is about making sure that we are delivering the pooling requirements of the LLAs. Having products that the LLAs want to invest in is a measure of our success. That is reflected in them investing, increased AUM will then follow.
The next 12 months is where we will think about that, but we need a conversation with the boroughs about what is realistic over the next three years. Something around the 90% mark of available assets under man-
20 | portfolio institutional | June–July 2019 | issue 85
The other area I would focus on, which came from the feedback from the days spent out and about visiting LLAs around London, is doing more on ESG and respon- sible investment issues. We have a solid starting point in that there was a responsible investment policy agreed in the autumn by the CIV, which was before I arrived. That policy was agreed unani- mously, which is no mean achievement across 32 LLAs of different political com- plexions. This is not often a party-political issue, but boroughs have different views and starting points on this. There has also been some recent shifting of sands in terms of views on engagement versus divestment, particularly in relation to climate change. Climate change has always been up there, but it feels like it has really risen every fur- ther up the agenda in the past six to 12 months. We are seeing a lot of individual LLAs doing a lot of thinking about their own ESG policies. The role of the CIV, of course, is to be ready to support that, so looking at carbon exclu- sion funds and low carbon funds are the sort of things that we are going to have to look at over the next 12 months as well.
It is interesting that you mentioned carbon exclusion funds. It is difficult to find a company that doesn’t have a carbon foot- print somewhere in its value chain. I
agree. Often people talk about these things without having thought through the detail. That is what we are doing now. Our
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