A decision in relation to the dispute between a group of pension funds and Henderson Global Investors is eagerly awaited. It is the first time that a UK court will have the opportunity issue a judgment in respect of a dispute between an institutional investor and an institutional provider.
The dispute arises out of Henderson Global Investors’ decision to invest the majority of the funds it raised in 2005 for one of its PFI funds for the acquisition of John Laing plc which the investors allege breached the terms of a limited partnership agreement and private placement agreement. The group of 30 pension funds which comprises, amongst others BAE Systems, British Steel, Bupa, Nestle, Scottish & Southern Energy and Tesco, are claiming that the purchase of John Laing plc exposed them to liabilities of a single company as opposed to a number of PFI projects and which they argue is a risky investment strategy that was not in line with the low risk description of the PFI fund. Henderson Global Investors, has argued in its defence that the pension funds are sophisticated investors who received professional advice and had the opportunity to withdraw from the fund following the announcement of its bid to acquire John Laing plc in September 2006. They have also argued that certain of the pension funds raised detailed questions in relation the investment in John Laing plc and were subsequently provided with responses to these questions. It is therefore arguing that it does not owe a duty of care to its investors.
The decision of the Court will be of particular interest to fund managers in respect of clarifying their duties towards their investors. It will also have implications for lawyers particularly in the context of drafting investment agreements.