UK Commercial Real Estate Debt (CRED)




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Dan Banks This email address is being protected from spambots. You need JavaScript enabled to view it.




In the years following the global financial crisis, the commercial real estate debt (‘CRED’) market has evolved dramatically. Regulatory changes in the banking sector and the economic impact of low interest rates have created opportunities for alternative lenders such as pension schemes and insurers.

Executive summary

CRED is one of the asset classes in which we believe there is value to be captured against liquid alternatives such as corporate bonds, given current market conditions.

For investors, such as pension schemes or insurers, who need highly predictable and low risk cashflows to match their liabilities senior CRED can prove a useful complement to more traditional government and corporate bonds. In a higher yielding ‘whole loan’ portfolio it can also be used in place of, or alongside, High Yield corporate bonds to provide improved yields and diversified risk exposure.

Although CRED has seen some yield compression, it remains materially elevated relative to both precrisis levels and other forms of credit investments along with enhanced credit quality. Importantly, over the past couple of years margins have remained relatively stable. For loans originated post 2008, defaults in senior credit have been extremely rare with managers expecting to realise full value.

In this paper, we consider the current appeal of CRED as an illiquid asset.

We believe there is an opportunity in this asset class because:

  • Investors currently receive a premium above similarly rated corporate bonds and this asset class has not experienced quite the same reduction in yield as we have seen in other forms of credit;
  • CRED loans are backed by recourse to a physical asset providing an additional layer of security compared to other types of credit;
  • Security is stronger than pre-2008 as Loan to Value ratios (the amount of the loan relative to the value of the property) are considerably lower;
  • Yields from CRED can be used to match long-term liability cashflows as part of a broader portfolio; and
  • CRED offers diversification relative to other traditional credit assets and can complement or replace core property holdings within a portfolio.

What is CRED and how does it work?

Commercial Real Estate Debt entails lending capital to companies for the purpose of purchasing or developing any form of commercial real estate. This can take the form of offices, hotels, shops, logistic warehouses, student accommodation etc. It may be lent on a single project or on a portfolio of assets.

CRED is particularly attractive for investors as it typically includes a legal charge on the underlying property or properties. This provides security in the event the borrower is unable to meet repayments on the loan. To provide for different investor risk and return preferences, CRED contains capital tranches which are prioritised differently in the event of default or refinancing. This is referred to as the capital structure and is depicted in the chart to the right.

Not strictly a separate part of the capital structure but Whole Loans are when multiple parts of the capital structure are combined, for example a combination of Senior and Mezzanine debt in one loan. The risk and return will need to be assessed on a case by case basis, but this type of loan is often more attractive to the borrower, as they don’t have to deal with multiple lenders.

Dan Banks, R&M Solutions


Key considerations for investing in CRED

Spreads: The additional yield relative to an equivalent government bond. This will be determined by the credit risk of the underlying loans and prevailing market environment. For example: spreads of senior debt will be lower relative to a mezzanine debt due to lower risk.

Cashflows: When you commit cashflows to CRED and when you can expect to receive them back.

Given the illiquid nature of the asset class it can generally take over a year to commit all the capital to a fund as deals are sourced. This then stays in the fund for approximately 3 – 7 years offering quarterly coupon payments with the principle repaid as the fund is winding down (see chart below).

Loan to Value (LTV): The value of the loan as a proportion of the value of the underlying property or properties.

This is a key condition on the borrower (called a “loan covenant”) which sets a limit on the outstanding loan amount as a percentage of the property value. This protects the borrowers’ exposure in the event of any default on the loan. Low LTVs are lower risk as you are less likely to end up with a loss in the event of default as the property the borrower has a charge over will be worth substantially more than the value of the loan.

Default risk: The probability the investment is not returned in full.

This is determined by tenant quality and economic environment. In the case of CRED this risk is largely mitigated by having underlying property as security, and the Loan to Value ratio described above.

Development Risk: Issues arising as a result of taking on projects with construction or large-scale redevelopment.

This can be avoided as many managers do not incorporate this in their portfolios.

Liquidity: How long it can take to have your investment repaid.

Loan term (the point borrowed capital is repaid) can be anything from 3 to 12 years. Investors should plan on having to remain invested for 7-12 years (fund dependent) with limited opportunity to sell early.

Financial structure: Where you sit vs. other investors and how much protection is built into the contracts.

In both senior and whole loan Fund the investor has first lien on the underlying security. We would expect a manager to insist on several stringent financial covenants which protect investors from loan quality degradation and allow the manager to take early action; for example, interest payment coverage or property value deterioration.

The opportunity

The European CRED market is benefiting from bank disintermediation and is immature in comparison to the US market. Within Europe the opportunity in the UK market is more accessible for investors due to more restrictive banking regulations.

Like other forms of credit, continued regulation in the form of Basel III has reduced traditional bank lenders’ appetite for real estate finance. Since 2008 there has been increasing opportunity for non-bank lenders (e.g. pension schemes and insurers) to invest into what had been a bank dominated market up to then. This opportunity has coincided with several changes within the lending environment which are advantageous for investors.

CRED can provide investors with attractive returns relative to similarly rated corporate bonds or leveraged loan comparators.

Relative to 2008, when senior LTV ratios were averaging in the high 70% with historically low spreads, today the market represents a much more attractive opportunity.

Commercial Real Estate Debt Spread over LIBOR (gross) LTV range
Senior debt 1.5% - 3.5% 50% - 65%
Whole loan 3.5% - 6.5% Up to 75%
Mezzanine debt 6.5% - 12.0% 60% - 85%

Increased governance from lenders, combined with higher spreads and stronger covenant protection provide investors with a genuinely alternative way to access the property market:

  1. Conservative LTVs: LTV ratios have declined substantially since the financial crisis and the market appears to have little appetite to change this. This gives investors an equity cushion of up to 50% (depending on seniority) mitigating property price depreciation to large a degree.
  2. Security: Unlike traditional credit and loans which provide recourse to balance sheet items in event of default, CRED is secured against the underlying property.
  3. Covenant Protection: In contrast to leveraged loans and direct lending which have seen a marked deterioration in covenant protection, CRED managers still insist on a full suite of enforceable covenants. These are generally specific to each underlying sponsor/property. This gives investors more confidence in achieving expected yields and lowers the cost of default.

Risks

If we focus on the senior and whole loan part of the CRED opportunity the risks are like that of other debt instruments and property markets:

Risk Mitigant
Market drawdown Whilst LTV ratios are at historical lows, investors should be aware this is relative to property values being at, or close to, all-time highs. As with all assets of this type it is impossible to predict the impact of a significant market event, though larger equity cushions give a degree of comfort.
Borrower default Strong financial covenants. Unlike other areas of direct lending CRED lenders still insist on a suite of stringent financial covenants. However, we are in the latter stages of a drawn-out economic cycle and we have already seen the effects on certain sectors – namely retail.
Mispricing of risk Increased due diligence on both sponsor and tenants. Due to the shorter-term structure of the loans there is a large amount of rolling business. High quality lenders can choose carefully the deals which they wish to transact on in terms of sponsor, tenant and sector exposures.
Concentration When allocating to the senior and whole loan space, a typical investment portfolio is comprised of 10-15 underlying loans. Although this is a small number of assets there is some diversification gained from managers preference for multi-let assets (such as office blocks) or loans against a portfolio of assets (such as logistics warehouses)

Final thoughts...

Low interest rates have made it difficult for investors to deliver stable cashflows without sacrificing return. This has pushed many investors to look for value in a wider range of asset classes. As we look across the spectrum of both liquid and illiquid assets, CRED has not been as affected by many of the issues we see in other classes with weaker covenants and/or low yields.

Based on this we believe there are opportunities across the CRED risk/return spectrum to put capital to use in an asset class that offers both compelling returns and strong protection in the event of adverse events.

As always, please contact your advisor with any question you may have.



River and Mercantile Solutions, November 2019.

Please note that all material within this communication is produced by River and Mercantile Solutions and is directed at, and intended for, the consideration of Professional clients only. This document constitutes a financial promotion within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). Retail clients must not place any reliance upon the contents.

The information expressed has been provided in good faith and has been prepared using sources considered to be reliable and appropriate. While this information from third parties is believed to be reliable, no representations, guarantees or warranties are made as to the accuracy of information presented, and no responsibility or liability can be accepted for any error, omission or inaccuracy in respect of this. This document may also include our views and expectations, which cannot be taken as fact.

The value of investments and any income generated may go down as well as up and is not guaranteed. An investor may not get back the amount originally invested. Past performance is not a guide to future performance. Changes in exchange rates may have an adverse effect on the value, price or income of investments.

A Spectrum of Delegation

Note 1: “River and Mercantile Solutions returns” represents the aggregated returns of the return seeking assets, including liability hedging solutions, of the set of our fiduciary management clients that have comparable investment strategies.

Note 2: Some figures are affected by rounding.

Note 3: For the avoidance of doubt, 22% is the amount which annualised River and Mercantile Solutions returns have outperformed annualised equity returns between January 2004 and March 2009, and 24% is the amount by which annualised River and Mercantile Solutions returns have outperformed annualised equity returns between October 2007 and November 2016.

Source: River and Mercantile Solutions, Bloomberg

Best DB Consultancy 2016

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards at the Pensions Expert Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best DC Investment Provider of the year for its innovative use of segregated custody accounts.

The business also won an award for Best Fiduciary Manager of the year for its expansion into DC and success widening the DC investment opportunity set through ETFs and the ability to use less liquid investments.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating dayto- day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

How the EDOS looked on 6 February 2013

Strategy

Chart

Risk management is key

sample chart

Integrity is critical to everything we do. Any perception of us operating without this quality will destroy our business. Clients need to trust the professionals on which they rely.
We believe authenticity should be recognised, rather than claimed and our belief that we offer this comes from the fact that it is mirrored back to us in our many conversations. We are candid and straight-talking and we know this because our clients, colleagues and competitors tell us so.
Respect informs all our behaviours – especially in difficult and challenging situations, where we need to discover the right solution. Our people know to frame their views in a way that shows respect for the individual concerned and the context of the discussion.
Citizenship is a broad but not necessarily woolly term. We believe it is a visible principle to support the best of what we do inside our company but also supports our desire to make a difference and create genuine benefit for others in our wider, commercial dealings.
We expect people to be open – not hiding information, or their views. We expect people to be straight-talking, particularly the leaders who drive and develop our business and bring our people along with them. Importantly, we believe in a constructive working environment.
We expect people to be passionate in a table-thumping way about clients’ success. The alternative is clear if we don’t – we won’t keep them and our competitiveness will drain away. The acid test for being passionate is whether or not our clients feel it, too. Our creativity and the strength of our relationships tells us they do.
We should be stretching ourselves - and each other - to be the best we can be. The starting point is to challenge, develop and achieve excellence in all we do. We set high standards and are intolerant of mediocrity. To this end, we are restless in creating the conditions in which we and our clients thrive.
Creativity is critical to our value proposition. We need to keep re-inventing ourselves to achieve our growth objective and to avoid uniformity. We seek to reward people who are creative, who involve others, who encourage higher quality input and are comfortable in challenging. We understand that, if the business is to reach out to more great people, they won't always be told what to do but will be intellectually receptive to being persuaded by superior argument. For us, it's the quality of the debating stance taken, not the title of the person making it.
While this is important, it means more to us. It is critical that, in our day-to-day dealings, both we and our clients benefit. To this end, we should not take risks in relationships where only one side is rewarded and we will be forthright in guarding against this eventuality. In day-to-day terms, it’s also how we organise our time, prioritise our work and assess new projects and development. The value of being commercial equates to creating value for all. It’s about balancing risk and cost against the potential of reward.
Ajeet Manjrekar

Co-Head of UK Solutions

Ajeet focusses on working with trustees to understand their specific investment and governance needs in order to design innovative solutions to achieve their funding objectives.

As a qualified actuary with extensive experience in both investment consulting and asset management, Ajeet is part of the senior management team with responsibility for the quality and evolution of our client-driven services.

He has extensive experience bringing together teams from different backgrounds to address unanticipated but emerging client needs. Examples have ranged from designing capital protection solutions for Defined Contribution schemes, to helping foster US pension schemes’ usage of liability-driven investment. Recognising that ideas can travel – that solutions arising in one region or part of the market can frequently be applicable elsewhere – he harnesses the expertise and insights of team members from across our business to solve the client problem, whatever it might be.

He re-joined us in 2016 having spent the last few years in Deutsche Bank’s asset management businesses. Prior to that he was a lead investment consultant advising several of our defined benefit and defined contribution clients.

Ajeet has a degree in Mathematics from Warwick University.

Barbara Saunders

Head of Client Engagement

Barbara has overall responsibility for client engagement with River and Mercantile Solutions, focusing on maintaining and improving our clients’ experience of the business. In this capacity she is involved with all our clients, but in addition she leads the teams advising eight defined benefit pension schemes, ranging in size from £70m to £2bn.

These include clients for which we act as an investment consultant, and clients that have appointed us as fiduciary manager. Over her career to date she has in-depth experience of working with many more clients, including larger DB schemes, DC schemes, sovereign wealth funds and charities.

Barbara has significant experience of providing advice across the full range of investment considerations. This demands a grasp of detail, and the ability to understand that detail in its proper context, and the decisiveness to make definite recommendations on the basis of that understanding . But it also requires an aptitude for conveying that understanding to others, and for persuasion. This can prove crucial when significant investment decisions are required within a fairly short timeframe, but it relies on her ability to develop trust with her clients over the long-term.

Barbara’s investment expertise is reflected also in her role as a leading member of the Investment Strategy Committee, which sets the house view on investment and strategic considerations for our DB clients. She has a particular depth of understanding of liability hedging, having spent the early part of her career modelling and trading LDI strategies for DB pension schemes.

Barbara is a qualified actuary.

She graduated in 2004 with first class degree in Mathematics from Royal Holloway, University of London, and obtained a Post Graduate Diploma in Actuarial Science from Cass Business School.

Barbara joined River and Mercantile Solutions in 2007.

Jack Berry

Global Head of Solutions

Jack is responsible for providing River and Mercantile Solutions with strategic direction across all of its advisory businesses, ranging from defined benefit (DB) and defined contribution (DC) pension schemes to insurance companies , in the UK and US.

He is also the lead adviser on several DB scheme clients. These include clients that retain River and Mercantile Solutions as an investment consultant, and those that employ it as a fiduciary manager. He has experience as adviser to numerous DB schemes with assets of between £25m and more than £5bn.

His clients appreciate his strong understanding of the interplay between, on the one hand, a sponsor’s need to contain its pension-related risk and, on the other, a trustee board’s need to develop an investment strategy. Likewise, they value his ability to communicate to trustee boards and other advisors on the design and implementation of complex solutions, including equity derivative strategies and liability-driven investment (LDI). He is also able to draw on his international experience in prior roles and with River and Mercantile Solutions’s advisory business in the US, when advising his clients.

Within River and Mercantile Solutions, he has led work on the use of derivatives in LDI and structured equity, playing a leading role establishing River and Mercantile Solutions’s bespoke solutions business. He has also been actively involved in the development of River and Mercantile Solutions’s US advisory business since 2007. He joined River and Mercantile Solutions in 2004.

Jack is a chartered accountant. After working as an audit manager at Ernst & Young Zimbabwe and then in the corporate finance team at Standard Chartered Merchant Bank, in 1995 Jack co-founded a corporate finance and structured finance advisory business, Real Africa Durolink Zimbabwe, as a subsidiary of Real Africa Durolink, a listed South African Bank. Jack was one of the founding executive directors of Real Africa Durolink London when this subsidiary was started in 1999.

Jack graduated as a Bachelor of Accounting Sciences from the University of South Africa and holds a Masters in Finance from London Business School. He is a member of the Zimbabwe Institute of Chartered Accountants.

Matt Way

Chief Operating Officer

Matt is a chartered accountant who began his career at Ernst & Young in 1989 before moving to Lehman Brothers, where he worked for nine years, until 2007. From there he moved to Bear Stearns and then to Man Group, where he worked for five years with Kevin Hayes, who is now River and Mercantile Group's chief financial officer. Matt joined River and Mercantile Solutions in 2015 following roles at RBS and London Clearing House.

Matt has gathered substantial experience in business partnering, applying financial, commercial and practical judgement to all operational issues including product viability, forecasting, operational infrastructure, risk controls and compliance. At River and Mercantile Solutions he takes lead responsibility for efficient operation and effective risk management of the advisory and fiduciary management divisions.

He has senior management experience managing large teams and engagements across multiple businesses and support functions. He has a focus on change management and project management, which he has used to deliver simple, practical and innovative solutions and to enhance efficiency. He coordinates diverse teams and functions to solve problems as they arise.

Patrick O’Brien

Investment Director

Patrick leads the investment team, which is responsible for delivering River and Mercantile Solutions’s fiduciary management services to clients. His team conducts on-going investment research, performance monitoring and risk tolerance management, implements asset allocation decisions, and conducts execution trading and transition management.

Patrick is responsible for supervising all of this. Above this, he is a member of the Investment Committee and he chairs the Multi-Asset Committee, which between them determine River and Mercantile Solutions’s views on which asset classes to under/overweight and which investment managers to invest with. He therefore plays an important role in the formation of investment decisions, both from month-to-month and, when financial market conditions dictate, intra-month.

Patrick also has lead responsibility on two defined benefit pension scheme clients, both with assets in the range £100m to £250m. One of these retains River and Mercantile Solutions as its investment consultant while the other is a fiduciary management client. In this capacity, Patrick plays a pivotal role advising trustees on investment strategy, introducing investment ideas and risk management ameliorations to the trustees, and giving them appropriate training to enhance their governance capabilities.

Patrick began his financial services career as an operations associate at Legal & General, following two years in manufacturing industry. He graduated from University College Cork with a BSc in Finance.

Patrick joined River and Mercantile Solutions in 2008.

Ross Leach

Co-Head of UK Solutions

Ross is Co-Head of UK Solutions, where since 2004 he has acted as a lead investment consultant to the trustees of defined benefit pension schemes and to corporate sponsors.

He has experience of clients with assets ranging from £50m to more than £5bn, and across River and Mercantile Solutions and his former employer he has client relationships that have lasted more than 15 years. This calls on his skills to understand the needs of clients, to understand investment strategies and products, and to match the latter to the former in the simplest but most effective way possible.

Some of his clients retain River and Mercantile Solutions as their investment consultant while others have adopted a fiduciary management approach. He has supplied advice that has taken schemes to buy-out, and is currently working with a number of schemes that are focused on reaching a self-sufficiency target over the next 10 to 15 years.

Ross is a member of River and Mercantile Solutions’s Investment Strategy Committee. This committee is instrumental in developing client advice, and has the final word on whether a particular investment product is fit for recommendation to clients.

Ross, who joined River and Mercantile Solutions after four years at Punter Southall, the company’s former parent, has a degree in Mathematics and is a Fellow of the Institute of Actuaries. He has worked on a number of actuarial working groups.

Pensions Insight DC Awards 2016 – Best Default Fund Strategy

26 October 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won an award at the Pensions Insight DC Awards 2016 held on 26 October. The Pensions Insight DC Awards 2016 and are designed to celebrate the excellent work done by defined contribution providers and schemes up and down the country.

P-Solve was named Best Default Fund Strategy as the judges stated they were impressed with how P-Solve adapts the strategy at retirement to allow for Pension Freedoms in a flexible way to meet the needs of different schemes’ members, and also the intelligent life-styling approach using blended funds.

Commenting on the award Niall Alexander, Director, P-Solve, said: “This month P-Solve celebrates its five year anniversary in DC fiduciary management. The award win reflects the hard work and results we have achieved on behalf of our DC clients (and specifically their scheme members) in that time, as we have sought to offer flexible solutions to the challenges facing trustees. Wanting to improve financial security for as many people as possible by thinking more deeply about investment than anyone else is central to our business.”

Engaged Investor Trustee Awards – Best DB Consultancy 2016

7 July 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won an award at the Engaged Investor Trustee Awards held on 7 July, celebrating excellence among pension scheme trustees and their providers and advisers.

P-Solve was named Best DB Consultancy 2016 as the judges said they were impressed by P-Solve’s innovation and service. The firm’s submission emphasised the work P-Solve has done developing tailored investment solutions for small and medium-sized pension schemes, as well as large ones.

Commenting on this year’s award Ross Leach, Managing Director, P-Solve, said: “We are very proud to receive this award and the recognition of the hard work on behalf of our DB clients it represents. We strive to understand the challenges facing trustees and offer a range of services to provide real insight and support for our clients.

Pensions Age Awards – Multi-Asset Manager of the Year 2016

25 February 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won the award of Multi-Asset Manager of the Year at the Pension Age Awards held on 25 February. The Pensions Age Awards were launched to reward both the pension schemes and the pension providers across the UK that have proved themselves by demonstrating excellence, sophistication and innovation in all aspects of what they do.

According to the judges, this firm has demonstrated its understanding of the multi-asset space by combining experience with skill in order to produce an investment offering well suited to the needs of today’s DB and DC markets – plus it has the performance to show its approach works.

Engaged Investor Trustee Awards 2015 – Best DB Consultancy 2015

2 July 2015

P-Solve, part of River and Mercantile Group, has been named Best DB Consultancy at the 2015 Engaged Investor Trustee Awards. The judges said they had been impressed by P-Solve's involvement in dynamic investment opportunities.

In addition to firm’s success, P-Solve client The Cheviot Trust won the Best scheme report and accounts category at the ceremony held on 2 July 2015, impressing the judges with its excellent design and well-executed graphics.

The award win is the latest in a number of recent successes for P-Solve having been named Best fiduciary manager and Best DC investment provider at the Pensions and Investment Provider Awards.

Commenting on the award, Jack Berry, global head of solutions at P-Solve, said: “We are very proud to receive this award and the recognition of the hard work on behalf of our DB clients it represents. We strive to understand the challenges facing trustees and offer a range of services to provide real insight and support for our clients.

"Wanting to improve financial security for as many people as possible, by thinking more deeply about investment than anyone else, is central to our business. We are proud that our work with pension schemes gives us us the opportunity to help more than 400,000 individuals.”

Pension Investment Provider Awards (PIPA) – DC Investment Provider 2015

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards, DC Investment provider and Best Fiduciary Manager 2015 at the Pensions Expert, Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best DC Investment Provider of the year for its innovative use of segregated custody accounts.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating day-to-day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

Pension Investment Provider Awards (PIPA) – Best Fiduciary Manager 2015

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards, DC Investment provider and Best Fiduciary Manager 2015 at the Pensions Expert, Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best Fiduciary Manager of the year for its expansion into DC and success widening the DC investment opportunity set through ETFs and the ability to use less liquid investments.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating day-to-day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

Pensions Consultancy of the Year 2017

24 February 2017

P-Solve is pleased to announce that it was awarded Pensions Consultancy of the Year at the Pension Age Awards 2017. The awards, now in their fourth year, aims to reward both the pension schemes and providers across the UK that have proved themselves worthy of recognition during increasingly challenging times.

The award recognises P-Solve’s bold approach to investment consulting since the business’s launch in 2001. This included, last year, the introduction of swaptions strategies for clients, allowing them to “get paid” for making strategic risk management decisions.

The panel of judges stated: “This firm stood out for its proactive approach and its use of innovation in a challenging marketplace. Its clear understanding of the investment hurdles facing its clients and its ability to help these clients, whatever their size, through the investment maze set it apart from the rest.”

Commenting on the award Barbara Saunders, Head of Client Engagement at P-Solve, said: “We are very pleased to have received recognition for the innovative investment solutions we can deliver. We are perhaps better known for being one of the pioneers of fiduciary management, but the investment intel that this gives us is applied equally to clients we advise. Ultimately, we look for the best solutions to our clients’ needs, and with clear explanations, our clients are able to act quickly when required. In turbulent times, opportunities arise, and you need to be fleet of foot to take them. We all know pension schemes need return, and we constantly search for ways to help them earn it.”

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Kevin Hayes

Global Head of Solutions

Kevin is Global Head of Solutions and Group CFO at River and Mercantile. He is an international CFO with 25 years' experience in financial services. Kevin began his career at Ernst & Young and was a Partner in the New York office covering financial services audit and consulting clients.

He moved to Lehman Brothers where he held various roles including: Global Capital Markets Controller, International CFO for Europe and Asia, and Head of Productivity and Process Improvement.

In 2007 Kevin joined Man Group PLC in London as Group CFO and Executive Director on the Group Board. He was also a trustee of the Man Group PLC Pension Plan.

Kevin has degrees in accountancy and law from Victoria University in New Zealand and is a Certified Public Accountant in the US.