Companies eager to deal with their underfunded pension plans have a new option: Sell them to former Morgan Stanley Chief Financial Officer Phil Duff.
Mr. Duff, who was the founder and chief executive of hedge fund FrontPoint Partners, has started an investment management firm that focuses on addressing institutional investors’ long-term funding needs.
Duff Capital Advisors, Greenwich, Conn., officially launched on March 5, with the help of up to $500 million in capital from private equity firm Lindsay Goldberg. Among other services, the new firm aims to buy corporations’ pension assets and liabilities — assuming employers are comfortable offloading their plan assets and obligations to a third party.
But Mr. Duff noted that such arrangements have become somewhat common in the U.K. in recent years. He added that his new firm is in the early stages of conversations with U.S. employers that are “looking to separate their pensions from the operating companies,” and noted that DCA may be acquiring a U.S. pension plan in the near future.
Mr. Duff said that, in general, DCA is looking to provide customized investment strategies and advice to “any organization with long-tailed liabilities.” He noted that corporate pension plans are “certainly at the top of that list,” given the number of companies burdened by underfunded defined benefit plans.
DCA also will work with health-care funds, government funds, endowments, foundations and even sovereign wealth funds in search of new ways to address their funding issues, Mr. Duff said. The firm is in the process of securing between $1 billion and $1.5 billion in seed capital from financial institutions for several of its investment strategies. (Financial Week)
