Centrica, Windsor, England, appointed Schroders Solutions as outsourced CIO for £10 billion ($13.2 billion) in assets in three plans, according to a Schroders news release Tuesday.
As part of the deal, the energy provider's seven-person investment team led by CIO Chetan Ghosh will join Schroders Solutions.
The move, planned for this quarter, will reduce key man risk while ensuring continuity of service to the trustees, the release said.
Centrica pension assets will be managed in an open architecture framework, and Schroders Solutions will help trustees develop the investment strategy, construct the overall portfolio, select and oversee third-party managers and address regulatory demands.
Neil Walton, head of OCIO and specialist situations for Schroders Solutions, said in an interview that in addition to the operational efficiencies of having Schroders manage the plans, the transfer offers the Centrica investment staff "good career paths."
External managers already chosen by Centrica "should take a lot of comfort that our aim is to change on investment grounds carefully. Change will be limited" at this point, as Schroders evolves the portfolio, with a 10-year goal of lowering investment risk "that leads to lower dependency on the sponsor," Mr. Walton said.
Allan Whalley, chairman of the Centrica trustees, said in the release that Schroders Solutions was selected after a thorough selection process that was supported by Isio. Officials at Centrica could not be reached for comment.
It is the second sizable OCIO arrangement in the U.K. this year.
In January, the £13 billion National Grid U.K. Pension Scheme, Binfield, England, hired Russell Investments as OCIO. According to Russell spokesman Matt Rogers, it was the pension fund's first time using an outsourced investment provider. About three-quarters of the pension fund's portfolio will continue to be managed by Legal & General Investment Management. The pension fund's previous in-house asset management arm, Aerion Fund Management, was sold to LGIM in 2015, Mr. Rogers said.
Russell was chosen to support continued derisking and "end game" positioning, including potential further insurance buy-in transactions, Russell said in a news release at the time.
Last June, British Airways, Harmondsworth, England, appointed BlackRock as outsourced CIO for £21.5 billion in assets in two plans. The arrangement included the transfer of several BA Pensions staff, including CIO David Stewart and deputy CIO John St. Hill.
The airline and money manager said in a joint news release that the deal covered assets directly under management that had been run by BA's in-house manager, British Airways Pension Investment Management Ltd.
Schroders Solutions was created by Schroder's acquisition of the U.K. fiduciary management and derivatives business of River and Mercantile Group in a £230 million deal finalized in February. It added about £42 billion in assets under management. As of Dec. 31, Schroders Solutions had £200 billion under management.
On March 29, Lloyd's of London appointed Schroders Solutions as investment partner of Lloyd's new investment platform consisting of several funds across asset classes that will be made available to Lloyd's market investors.
