Fund takes stand against guns

WILLIAM MACE
Last updated 05:00 20/12/2012

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One of the world's largest private equity groups has pulled its money out of a United States gunmaker linked to last weekend's school shooting, but New Zealand's Superannuation Fund says it has no blanket policy against investing in weapons manufacturers.

New York-based Cerberus Capital Management issued a statement to the market signalling its intent to sell its majority ownership of Freedom Group, a company that sells gun brands such as Remington and Bushmaster to retailers.

A Bushmaster AR-15 gun was used by Adam Lanza to kill 28 people, including 20 children, at a Newtown, Connecticut school last week.

A Cerberus statement said the shootings were a "watershed event" that had raised debate on gun control in America to an unprecedented level.

The statement came after the United States' second largest pension fund - the California State Teachers' Retirement System [CalSTRS] - said it was reviewing its investment with Cerberus in the wake of the shootings.

CalSTRS said it owned 2.4 per cent of Freedom Group and had invested US$751.4 million with Cerberus by the end of March.

The Super Fund, which has money invested all over the world, said it had no stake in either Cerberus or Freedom.

But a fund spokeswoman said it also had no blanket ban on investments in weapons manufacturers other than those explicitly mentioned in the fund's responsible investment policy. Those include companies involved in the production of cluster bombs, nuclear explosives and anti-personnel mines.

The spokeswoman said she could not say what the fund would do if a company or fund where it was an investor bought Freedom Group.

"Understanding environmental, social and governance issues was an important part of our risk assessment and due diligence on prospective individual investments", she said.

The fund could have regard to New Zealand law, the policy positions of the government, and the "actions of our peers" in deciding whether to invest responsibly, she said.

Simon Tyler, the chief executive of two other government funds - the Government Superannuation Fund for public servants and the National Provident Fund - said he could not respond by deadline to a request to identify whether investments had been made in Freedom.

American gun retailers have also reacted in unprecedented ways to the shooting.

Retailer Dick's Sporting Goods pulled all guns from its store closest to the site of the massacre in Newtown, Connecticut, and suspended the sale of certain kinds of semi-automatic rifles from its chains nationwide, Reuters reported.

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Walmart stores took down an informational website about semi-automatic Bushmaster rifles and Cabela's continued to advertise AR-15 type Bushmaster rifles on its website, though it said the weapons were not available for sale online or at its Connecticut store location.

Founded in 1992 by Stephen Feinberg and William Richter, New York-based Cerberus has more than $20 billion under management. Bloomberg reported that Feinberg's father, Martin Feinberg, is a resident of Newtown.

The Super Fund, GSF and NPF have been under fire recently over responsible investment practices, with the latter two admitting they have invested in three companies that the Green Party alleged produced cluster bombs.

- © Fairfax NZ News

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