BT Pension Is Said to Consider Sale of Money Manager Hermes

Updated on
  • Hermes has assets under management of about $41.3 billion
  • Process is preliminary; BT Pension has yet to name adviser
A network engineer from Openreach, a unit of BT Group Plc, works on wiring inside a primary connection point box in this arranged photograph in Upminster, U.K., on Thursday, Nov. 10, 2016. Regulator Ofcom called on BT, the U.K.'s former telecommunications monopoly, to set up a legally separate entity for the Openreach network unit within BT, with its own board, but stopped short of seeking a breakup. Photographer: Chris Ratcliffe/Bloomberg

BT Pension Scheme is considering a potential sale of Hermes Fund Managers Ltd., which oversees money for the retirement plan’s members as well as external clients, according to people with knowledge of the matter.

The plans are at an early stage and the pension fund has yet to appoint banks to look for potential suitors, the people said, asking not to be identified because the discussions are private. The deliberations may not lead to a sale, they said. A representative for BT Pension Scheme and Hermes declined to comment.

Hermes has been managing money for BT Pension Scheme since 1983, a year before the company that would eventually become BT Group Plc was privatized. It started investing for other clients more recently and manages about 30.8 billion pounds ($41.3 billion) in assets, according to its website.

Active fund managers face an unprecedented assault on their revenue streams as investors shift to cheaper passive funds. The industry has already seen a flurry of deal activity as competitors joined forces to manage the structural changes that threaten profit margins. BT’s pension fund pulled an 8.4 billion-pound government-bond investment mandate from Hermes about two years ago to allocate the deal to cheaper tracker funds.

Hermes manages money for more than 470 clients globally and in addition to public securities is involved in private markets including real estate, according to its website. It got involved in the redevelopment around the rail hub of King’s Cross in London and has invested in Eurostar and Associated British Ports.

— With assistance by David Hellier, Ambereen Choudhury, and Sarah Jones

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