LONDON - ESN Pension Management Group Ltd., the internal manager for the 14.8 billion ($23.4 billion) Electricity Supply Pension Scheme, may be sold.
ESN's shareholders appointed Cazenove & Co., London, to explore the possibility of a sale, but no decision has been made yet, said ESN Finance Director W. Brian Matthews. ESN is owned by the U.K.'s 12 regional electricity companies plus The National Grid Co. PLC, National Power PLC, Nuclear Electric PLC and Power Gen PLC.
If sold, it would be the third privatized U.K. money manager in recent years. Queen Anne's Gate Asset Management Ltd., the in-house money manager for the U.K.'s water companies, was acquired last year by Jupiter Tyndall Group PLC, since acquired by Commerzbank. Currently, CIN Management Ltd., the coal industry's money manager, is close to being sold; its venture capital arm, CINVen, was sold to management last month.
London-based ESN manages all or part of the retirement assets for 21 different industry employers in 14 different unitized asset classes.
Mr. Matthews said it has been difficult for ESN to win mandates from other pension funds because they view the manager as having one big client and fear it might not pay adequate attention to a smaller client.
Mr. Matthews said ESN's shareholders believe "new ownership should be held by someone in a position to expand fund management." A management buy-out is unlikely because it would not improve market share.
The issue of selling appears to be motivated by a desire by its clients to use other money managers. Participating employers intend to amend the plan's rules to introduce greater flexibility and choice of outside managers, according to the pension fund's annual report. Changes will not be implemented for at least two years, Mr. Matthews said.
The electricity industry was privatized in 1990 and now is in the midst of a huge consolidation, but Mr. Matthews said the recent merger mania is unrelated to the manager's status.
If the owners of ESN agree to sell, Cazenove will send an offering memorandum to selected institutions, he explained.