Tuesday, 9 October 2007

Canadian pension fund buys voting adviser

Here's an interesting development (hat-tip to Peter C) in the ownership of proxy advisory firms. The Ontario Teachers’ Pension Plan has bought the US-based adviser Glass Lewis for a reported $46m. This follows the acquisition of the firm last year by Xinhua Finance, which caused all kinds of hand-wringing about conflicts of interest.

The Wall Street Journal has a dig suggesting that being owned by an activist pension fund brings its own conflicts. But the fund itself has argued that it will take a hands-off approach. Actually, there was a similar tie-up in the UK with RREV, which was at one time part-owned by Hermes (and the NAPF). I assume that RREV is now completely owned by RiskMetrics since the NAPF sold out. The Glass Lewis development also comes in the wake of ISS (RREV in the UK) being rebranded under the RiskMetrics stamp.

While we are on te subject of the OTPP, one of its interesting investments is a 25% stake in Northumbrian Water. This forms part of its infrastructure portfolio. Notably the OTPP has a non-exec on the board as part of the arrangement. Whilst in pure governance terms this clearly makes the director non-independent, if you are going to have an investor represented personally I would rather have a public sector pension fund in there than a fund manager.

No comments: