First glance at London Councils' CIV, designed to reduce £72.8m fee bill

Editor's blog: An eagle-eyed colleague over at our sister title MandateWire spotted London Councils' tender, issued this morning, for a common investment vehicle to be used across its 33 members.

This follows the creation of a limited-liability company, revealed in a press release on Monday, to house the vehicle. "We see no reason to divide the model by asset class," its chair and mayor of Hackney Jules Pipe said on Monday: thus the single CIV.

The body hopes to award the mandate by the fourth quarter, and for it to be operational by the second quarter next year, with an initial market value of £5bn.

It expects these fund administration and depositary fees to be fractional, at between £50,000 to £500,000 over the course of the contract, set at five years, with the option to extend for a further five.

Drawing upon research from consultancy Hymans Robertson, the government announced in May that it was also exploring compelling schemes to use CIVs to reduce the costs of local authority pension fund investment.

Source: Department for Communities and Local Government

Though rightly reported as a major shake-up, and a potential blow for the fund management industry, the move picked up on the collaboration already implemented by many funds through the increased use of shared investment strategies.

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