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Generation to close main fund to digest business wins

New money inflows prompt firm to schedule ‘soft-close’.

Generation Investment Management, the high-profile fund manager set up by Nobel Peace Prize winner and former US Vice-President Al Gore, and David Blood, the ex-Goldman Sachs investment chief, is preparing to close its main $4bn (€2.7bn) equity fund to new money after a glut of business has prompted a review of liquidity in the companies it invests in. Generation has already had to turn down at least one pension fund client seeking to invest a large volume of assets. Its main global equity fund invests in a concentrated, balanced portfolio of less than 50 undervalued stocks it believes will outperform because of future business prospects in environmentally or socially sustainable sectors.
Richard Campbell, spokesman for Generation, said the manager was approaching a ‘soft close’ of the fund, which he said had now reached $4bn in assets: “We’re expecting it to happen some time this year and it’s unlikely we’ll take in more than $5bn. There are a couple of reasons for this. One is that Generation runs performance related fees so it is not interested in piling up assets. Instead it wants to ensure it can fully serviceexisting clients. The second is that quite a lot of the companies they invest in are small cap, which means there is a certain liquidity issue as the fund grows.”
Campbell said performance in the fund had been “very good” and that new business has been particularly strong in Europe. Generation does not publicly disclose its performance numbers.
Speaking to Responsible Investor in July, 2007, David Blood said Generation then had assets under management approaching $1bn from 15 institutional clients: five in Australia, five in the US and five in Europe.
In November last year, Generation signed a deal to distribute its funds in Switzerland through Swiss fund manager Lombard Odier Darier Hentsch. It also signed a similar funds tie-up with Colonial First State in Australia.
It also made its first move into private equity investments in November 2007, via a joint-venture with Kleiner Perkins, the US venture capital firm, to fund technology start-ups that address global climate change. Every year, five per cent of Generation’s profit goes to a foundation to promote sustainability in capital markets.