Mon, 14/01/2013 - 11:44
Former chairman and chief executive of 3M, Sir George Buckley, and ex-head of responsible equity strategies at PGGM, Alex van der Velden, are launching an asset management firm designed to engage in a close partnership with the companies it invests in – a practice they have coined “ownership investing”.
Buckley (pictured) says: “There is a pressing need for shareholder engagement and a sustainable approach to business in the current turbulent economic environment. The chance to chase a quick dollar (and the fear of not doing so) has distracted investors in the past, often to the detriment of long-term growth and good returns, and this simply has to change if we’re to get the economy back on track. It’s not about the next quarter or even the next year – it’s about the next decade.”
Ownership Capital will be run by the former PGGM Investments team that managed a EUR3bn in-house mandate and achieved significant outperformance. It will manage a long-horizon fund, investing in a concentrated portfolio of North American and European equities for international institutional investors, with a target fund size of EUR2bn.
The Amsterdam-based firm will make investments using a fundamental financial and extra-financial research process, considering companies which, in addition to sound strategy and execution, perform well on corporate governance, environmental and social issues. It will create additional long-term value through engagement with company management in a strategy Alex van der Velden and his team initially developed and successfully executed at PGGM.
“A narrow focus on buying and selling has made owning with skill something of a forgotten art,” says van der Velden. “The Kay Review criticised an often disengaged and short-termist investment approach which undoubtedly contributed to the financial crisis. Shareholders have an opportunity and, we believe, a responsibility to foster a long-term approach and a consideration not just of short-term financial matters, but also factors related to the governance of companies, and their social and environmental impacts.
“Our experience has shown that ‘ownership investing’ not only contributes to better corporate governance and sustainability, it ultimately generates higher investment returns.”
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