Insight Exchange: Julian Brown

Written By: Julian Brown
Managing Director
Russell Investments

LAPF Investments speaks with Julian Brown to discuss some of the issues shaping the sector

Julian is a managing director at Russell Investments where he engages with consultants and intermediaries who provide governance services to both LGPS and private sector investors. He has over 20 years experience within the LGPS investment sector, from a variety of various stakeholder perspectives: as an officer at Nottinghamshire LGPS, as an investment consultant advising LGPS schemes, and as an asset manager investing LGPS client capital.

Julian has a particular interest in private markets, his experience includes: setting-up the private equity portfolio at Nottinghamshire, working on local private market programmes at the forerunner of the British Business Bank, and he is currently a Director of the WPP Private Credit Fund.

 

With LGPS consolidation now being taken forward, what are the key issues that need to be addressed to help consolidation deliver the best outcomes for the LGPS?
The best outcome for the LGPS – as a whole – will require that pools address the issues of continuing “professionalising”, transparent oversight and coordinated private market programmes. All pools have achieved admirable progress in a constrained timeframe; however, the developments towards efficient, best-in-class investment offerings need to continue. As does the development of investment strategy advice provision, and its demonstrable oversight and benchmarking. Finally, the potential issue of six separate LGPS bidders for productive UK assets cannot be left to chance.

Value for money is a major theme in the bill. What does value for money mean in the context of the LGPS and where can LGPS funds and pools look to maximise value?
I believe value for money means efficiency in delivery – ensuring that the pool operating costs are managed appropriately and effectively. As the pools mature and focus on the ongoing, business-as-usual delivery for their clients, including the new governance services that the government requires, both investment and governance offerings will need to be benchmarked against other potential alternatives to the current arrangements. These would include the other pools, private-sector fiduciary managers, and global comparators – such as the much vaunted “Maple 8”.

The bill encourages LGPS investment in UK growth. What types of local projects should be prioritised, and what support would help make them happen? What types of investment would make the biggest impact?
As difficult as it would be to deliver, the biggest impact would come from a programme of small, ultra-local investments that struggle to bridge the gap between angel and institutional capital. Integrated projects, such as renewable energy schemes that could deliver combined heat and power alongside seed capital to start-ups, incubators and community projects would deliver real grassroots growth across the whole of the UK – and not just in the usual geographic areas of focus (e.g. London / the South-East).

The bill talks about “professionalising” the LGPS. What do you think that might look like in practice – and what changes might it mean for how funds and pools work together?
I disagree with the professionalising premise. For me the changes in working practices that are required to ensure that funds and pools work together effectively are most acute in private markets. The potential for uncoordinated, sub-optimal outcomes when multiple pools with similar investment requirements bid for a limited number of investments (such as Productive / Local / Impact assets in the UK) is – quite frankly – somewhat concerning. Coordinated working groups, specialist pools or mandated collaboration could all be possible solutions.

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