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Business Analysis & Features

Edi Truell: For his next trick, saving pensions

What do rhinos and retirement funds have in common? This investor and deal maker has an interest in both, and many projects besides. Jamie Dunkley tries to keep up

It has been 30 years since Edi Truell cut his teeth as a trainee with a Wall Street bank, yet there isn’t a hint of business-speak as he raves about the progress of one of his most recent investments.

”Imagine you’re into a weird combination of things,” he says in the City office of his venture capital empire. “Something like rhinos, Porsche 911s and gardening. We can produce a specialist magazine for you that have all these things in it – plus we’ll include a fourth thing to shake things up a bit.”

He’s talking about Imagine Publishing, a company that he and his brother Danny majority-own through the investment vehicle Disruptive Capital Finance.

Imagine owns 19 print titles, including All About History and Photography for beginners, he says, and then it’s on to the next project. 

“This one [Atlantic Supergrid Corporation] is about developing a 1,000-mile cable under the Atlantic to import power from Iceland to the UK. We have an energy crisis and they’ve got   unbelievable amounts of spare power. We have lots of projects... they’ll probably be another one tomorrow.”

Mr Truell made his name as the founder of the private equity giant Duke Street Capital in 1998, where he also gained a reputation as one of the City’s most astute deal makers; he sold his 30 per cent stake in the company before the financial crisis. His next venture was Pension Corporation, which now controls £10bn of assets, and although he maintains a stake in the business (which is tipped to list on the London Stock Exchange) through the Truell Charitable Foundation, it is other interests that now take up most of his time.

One of these is Tungsten, an electronic invoicing business that listed on London’s junior AIM market last October and now processes invoices for customers including Kellogg’s, Tesco and Unilever. Tungsten has also ventured into the public sector, having secured a lucrative contract with the US Department of Veterans Affairs, and now it has set its sights on the NHS and other government organisations.

“The Department of Veterans Affairs is about the closest you can get to the NHS over there and they have all the same efficiency problems,” says Mr Truell. “We think we could save them about  3 per cent to 4 per cent of their total spending.”

He added: “We recently met with a senior member of the UK Government and discussed the savings that we could help them make.  We received a very enthusiastic response and are optimistic that this will lead to real savings for the UK public sector. I’d like to think we can save the cost of an aircraft carrier.”

Other interests include the insurance technology specialist Tantalum Corporation, but the spotlight for the past 18 months or so has been on a job across the Square Mile, with Mr Truell having been asked to chair the London Pensions Fund Authority by Boris Johnson, the Mayor of London.

The £4.8bn scheme provides benefits to almost 18,000 employees working for 318 charity, private sector and local government employers.

It pays retirement benefits to 35,000 pensioners, many of whom used to work for the Greater London Council and the Inner London Education Authority.

Since being appointed at the end of 2012, he has stamped his mark on a scheme that he hopes to mould into a version of the highly successful Ontario Teachers’ Pension Plan, rather than a typical, poorly funded UK public sector pension scheme.

“One of the first things I did was to ask the team why we held so many gilt-edged securities yielding 2 per cent.

“The response I got was that it was because they were safe. I and the new board regarded then as ‘safely guaranteeing bankruptcy’ and we are moving our portfolio into longer- term investments like infrastructure, housing, private assets that over 20 to 40 years will make us better returns.

“It’s what the Ontario scheme has done so well. Eventually I am aiming for 45 per cent of our assets to be  going to be in private illiquid assets and then 55 per cent in mega-cap corporates.

“It’s going well but my next challenge is to get more funds involved, partner with other pension funds and we can save a ton of money. They may be based in any part of the country – it doesn’t matter.”

His approach has sparked a debate across the UK pensions industry, with many experts now calling for co-operation among public sector schemes.

Julian Brown, a director of the consultancy JLT Employee Benefits, says: “Local government pension schemes are increasingly looking at joint manager search and selection exercises when appointing fund managers.

“If a number of the schemes go to the market in a single, simultaneous and co-ordinated manner – as three of them have done for a recent infrastructure tender process – then this will provide them with the scale and buying power of a merged entity.

“But crucially it will still allow them to retain local accountability, and thus deliver on their key localism agenda. Not only does this collaborative effort achieve fee discounts from the managers who tender to run the larger combined mandate, but a single search exercise also saves on investment consultancy fees.”

Whatever happens, it’s unlikely the City is going to see the back of Mr Truell any time soon, with flotations of Imagine and Tantalum expected in the future.

There’s never a dull moment when Edi Truell is around, even if it’s not always as exciting as rhinos, Porsche 911s and gardening.