Academic pensions ‘should be invested in university spin-offs’

Academic pension funds should invest more in university spin-off companies that are likely to deliver long-lasting benefits to society, a higher education leader has said.

In an interview with Times Higher Education, Martin Paul, the president of Maastricht University, said that sector pension funds had played a vital role in establishing a “triple helix” relationship between universities, the private sector and the government in the Maastricht region.

APG Pensions Group, which manages the assets of the ABP Dutch civil service pension scheme, the world’s third-largest pension provider with assets of about £200 billion, has been a partner and key investor in Maastricht’s Brightlands Health Campus, a cluster of research institutes and private companies focused on big data sciences targeting health and financial markets, explained Professor Paul.

Other Brightlands campuses, focused on agriculture, logistics, bio-based materials and medical sciences, had also attracted investment of €600 million (£508 million) from APG and other public and private partners.

Pension companies are, in many ways, perfect partners for university spin-offs, and not only because of the potential financial yields to be gained from growing companies, Professor Paul said.

“We can help pension groups – they can generate additional positive impact on society as companies involved in this kind of [scientific] research achieve this,” he said.

Few university spin-offs will achieve the profitability of Google, Facebook or Hewlett-Packard, which began life on US campuses, but investment in this type of start-up might address growing ethical concerns about the assets held by academic pension providers.

Activists in the UK have called on the sector’s largest pension scheme, the Universities Superannuation Scheme, which controls assets of about £50 billion, to divest from defence contractors, fossil fuel companies and tobacco brands, where it holds significant stakes.

In a statement, the USS said that it did “not rule out investing in early stage capital opportunities” arising from universities, although its assets were generally focused in larger, more established businesses.

“The level of specialist knowledge required and the relatively small size of individual transactions make it hard for our in-house team to invest directly in this domain,” it said.

However, the USS had made investments in high-tech companies at a later stage, such as buying into “royalty streams [from medical companies] that better match our liabilities cash flows”.

Professor Paul also explained to THE how cross-border cooperation with universities in Germany, Belgium and Luxembourg, as well as with other Dutch universities, had been key to creating the “critical mass” of research needed for its high-tech business campuses.

Located at the border of four countries, the university has been able to link up with universities in Brussels, Leuven, Aachen and Liège. This has been crucial to the launch of Brightlands’ Maastricht Health Campus, which officially opened in September 2016, Professor Paul said.

“The network model is the way forward,” he said, pointing out that the strategic alliance of these knowledge centres enabled access to some 4 million people, whereas the region of South Limburg, where Maastricht is based, had just 650,000 inhabitants.

There have been repeated calls for fully fledged mergers between universities on the borders of the Netherlands, Germany and Belgium, but such unions are impractical, explained Professor Paul.

“In Germany, universities are under the control of provinces; while it is different in the Netherlands,” he said of the Dutch system funded by central government. “Germany has not introduced the Bologna Process around master’s degrees in some disciplines, so their system is not transferable to ours.”

jack.grove@timeshighereducation.com