A high court judge has ruled against the 22 pension funds attempting to sue Henderson Equity Partners for allegedly breaching the mandate for its Private Finance Initiative Secondary Fund II.
The investors, which include the BBC, BAE, BUPA and Tesco schemes, claimed the acquisition by the fund of construction firm John Laing, and the way this deal was structured, was unauthorised.
They claim the fund promised to invest in low-risk PFI or public private partnership concession companies to deliver inflation linked returns.
After using the majority of its assets to purchase John Laing, a PFI specialist with a large pension deficit and some non-PFI assets including a holding in Chiltern Railways, the fund saw two thirds of its value wiped out in 2007-08.
The £1bn acquisition was made by Henderson Infrastructure Holdco but was principally funded by £530m in investment from the PFI Secondary Fund. The fund had raised £573.5m from investors.
A spokesman for the claimants, representing 22 of the funds 29 investors, said last year they believed the pension deficit at John Laing was in part responsible for the fund's disastrous performance (PP Online 6 December).
However after a preliminary hearing on Friday, Mr Justice Cooke ruled in favour of the fund on the allegations of breach of mandate.
The fund's parent company, Henderson Group, said it did not know whether the investors would appeal the judgement. The pension funds said they were reviewing their options.
Click here for a timeline of events leading up to last week's judgement.
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