Pension funds buy into Transocean despite US criminal justice probe: RI Exclusive Research

SEC filings show mixed response by investors to Deepwater drilling company

Some of the world’s biggest institutional investors, including US public pension funds such as CalPERS and New York State Common Retirement Fund, were raising their investment stakes during the second quarter in Transocean, the offshore drilling contractor implicated in the Deepwater Gulf of Mexico oil spill crisis, despite the launch of a criminal investigation into the disaster by the US Department of Justice. The two US public pension funds along with the Korea Investment Corp bought shares in Transocean during Q2, according to Securities and Exchange Commission (SEC) filings. Other major institutional investors – notably Canada’s Ontario Municipal Employees’ Retirement System, the Ontario Teachers’ Pension Plan, public funds in Colorado and Texas as well as Singapore state investor Temasek – initiated shareholdings in Transocean during the quarter. However, other institutional investors such as the Canadian Pension Plan Investment Board, the Employees Retirement System of Texas, IBM Retirement Plan, Ohio’s PERS and STRS, Kentucky Teachers, TIAACREF, Hermes and APG All Pensions Group, all cut stakes in Transocean, according to the filings.
The US Department of Justice investigation into Deepwater was launched on June 1.The asset owners’ 13-F SEC filings shine a rare light on institutional investor movements as the Deepwater oil spill came closer to being capped following one of the world’s largest oil-related environmental disasters. Among a slew of other legal proceedings, the State of Alabama is also currently suing BP, the UK oil major, and Transocean for their involvement in the huge spill. Transocean says it is carrying out an internal investigation into the Deepwater platform blow-out, while BP has set aside $20bn in a damages contingency fund. US-listed but Swiss domiciled Transocean was overshadowed by the intense spotlight on BP, but there were still significant shifts by investors during the crisis period. Transocean shares had been as high as $92 before the accident but fell to lows of $42 in mid-June, though they have since recovered.
Earlier this month, Swiss authorities blocked a planned $1bn dividend to investors pending litigation related to the oil spill. Transocean grew out of a merger in 2007 with GlobalSantaFe, and over the years has shifted its domicile from Delaware, to the Cayman Islands and now to Zug. For a PDF detailing the shift in Transocean holdings by institutional investors, please click here. Please note the PDF includes a correction to Aviva’s shareholding in the first quarter.