Track the business sector
To kick-start the process of looking for a new investment, we review different business sectors to find one that suits what we’re looking for.
In order to pay members’ pensions long into the future, we look for sectors that are resilient to things like recessions, those that provide an essential service or infrastructure and have potential for growth. These are sectors like wind farms, telecommunications and utilities.
Identify the potential business
After deciding which sector we want to invest in, we’ll then review different businesses open to investors. This could be for reasons such as needing to raise capital to help with their expansion plans, or the business is for sale.
Engage with the management team
At this stage, we need to assess how credible the business is, find out what their plans for the business are and what they’re looking for in an investor or new owner. Various meetings take place, ranging from informal conversations, to full management presentations.
It’s important that we have a good relationship with the management teams, so we can work closely with them to make sure they’re making the right decisions for our members. So, this is where it’s key to build that trust and confidence.
Carry out due diligence
Alongside meeting with the management teams, we carry out due diligence on the business that we’re looking to invest in. This can be anything from examining financial records to carrying out background checks, reference checks and sometimes even psychometric testing.
Our Responsible Investment team will take the lead on reviewing things such as the health and safety track record of a business and finding out what their sustainability plan is.
This is all done to mitigate risk and ensure we’re making secure investments for our members.
Making the investment
If we’re happy with the results from the due diligence and engagement, then we’re ready to make an offer to invest in the business.
In many instances, such as if a deal is of a certain size, it’ll need to be signed off by the USSIM board. This gives an extra layer of protection for members’ money and makes sure we’re investing in the right businesses to pay our members’ pensions for years to come.
In this case, if the USSIM board approves the investment, we’ll go ahead and make the offer and wait for it to be accepted, or in some cases it’ll be rejected if the business chooses to take an offer from a different investor.
Monitoring the investment into the future
Once we’ve made an investment, our job doesn’t end there. We’ll get a seat on the board and have a key role in decision making. We’re there to make sure the business makes the right decisions to create value for our members.
We continuously monitor our investments long into the future, so we can hold the business to account if they’re not meeting our expectations, or if we think changes need to be made to better suit our members’ needs.
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