Fund manager Henderson Group is preparing a defence against 23 of the UK's largest pension schemes suing for potentially hundreds of millions of pounds in damages claiming a fund run by its private equity arm breached its mandate.
A source close to the claimants' legal team said the investors include the pension schemes of Tesco, the BBC and defence group BAE Systems, who invested in the Henderson PFI Secondary Fund II LP.
The vehicle raised 573.5 million pounds in 2006 and was set up with a remit to focus on private finance initiative concessions whereby public infrastructure projects are funded with private capital.
In late 2006, after a bidding war with Allianz, the fund completed an acquisition of John Laing, a construction conglomerate, valuing it at around 1 billion pounds.
The source close to the claimants said the investors claim the acquisition does not fit the mandate to focus on PFI.
However, a source close to Henderson questioned why the case is being brought five years after the deal when the investors did not object to the deal during a lengthy bidding war.
Henderson issued a statement late on Tuesday stating it is confident that it has no legal liability to investors.
We have considered these complaints carefully. We are confident we have no legal liability to investors in this fund. We will vigorously defend these proceedings, the fund manager said in a statement.
The source close to Henderson said that after the acquisition, the fund manager had embarked on a drive to dispose of John Laing businesses that fell outside the PFI mandate which included a British railway company.
The disposal programme was disrupted by the global financial crisis but the fund did not breach its mandate, the source said.
(Reporting by Chris Vellacott; Editing by Sinead Cruise and Mike Nesbit)