The case explores whether alternative investments play a unique role in achieving low carbon dioxide emissions at the portfolio level. This case is set in April of 2020 and follows Kasper Ahrndt Lorenzen, Chief Investment Officer, and Peter Tind Larsen, Head of Alternative Investments, at PFA, the largest commercial pension fund in Denmark. PFA had recently seen increased demand from its corporate clients to offer a product with lower carbon dioxide emissions. The case explores PFA's decision to offer a "Climate Plus" product that would aim to produce strong returns and meet ambitious climate-related goals. In the case, the protagonists meet to discuss the role of alternative assets in the product. Importantly, PFA already has a significant presence in the alternative space and, in particular, in private equity and renewable energy. A large fraction of their alternative portfolio is managed in-house. Among other things, PFA is thinking about adding timberland investments as a new asset class to achieve net zero emissions. Lorenzen and Larsen need to determine if they could leverage their existing team and processes to invest in timberland and whether it is the right time to launch a climate-focused product. This case provides a good platform for discussion on direct investing in the alternative space and the role of alternatives for large institutional investors.
By early 2020 Harvard University was facing growing pressure from students, faculty, and alumni to divest its $40 billion endowment of financial stakes in fossil fuel producers. Its previous policy of avoiding the issue was quickly becoming outdated-$21 trillion of institutionally managed money now gave some consideration to sustainability. This case considers the two important questions surrounding a potential divestment: 1) Should the University alter its endowment's portfolio to meet broader social objectives, and 2) If so, how should it integrate climate objectives, or ESG considerations more generally, into its investment strategy and portfolio construction? In the case, the University is being advised on these questions by Nicole Abramson, an investment management professional specializing in ESG products. To formulate her recommendation, Abramson considers the views of Harvard's stakeholders and the sustainability best practices of institutional investors and asset managers around the world.
On April 8, 2019, Occidental's CEO Vicki Hollub made a private offer to buy Anadarko Petroleum Corporation for $72 in cash and stock. Anadarko's CEO Al Walker said he would consider the offer, yet three days later, on April 11, he signed a merger agreement with Chevron in a deal worth $65 per share in cash and stock. This agreement included a $1 billion "break-up" (termination) fee payable to Chevron if Anadarko accepted another offer. To avoid losing the deal, Hollub then made an initial public offer to buy Anadarko for $76 per share in cash and stock on April 24. When Anadarko failed to respond, Hollub, revised her offer on May 5. Although the revised offer had the same stated value of $76 per share, it included substantially more cash ($59 per share instead of the original $38 per share). With competing offers on the table, Walker now had to decide whether to accept Chevron's $65 offer or pay the break-up fee and accept Occidental's $76 offer? Of course, once he had made up his mind, he would have to convince his board that it was the right offer to accept and the right price.
Two companies, Myriad Genetics and OncorMed, competed to develop a genetic test for breast and ovarian cancer susceptibility. Although the two companies had offered genetic testing only to women who participated in their research studies, in 1995, both were considering selling their testing services to physicians generally. Despite the promising market for this testing service, some scientists and patient activist groups believed that it was premature to provide testing outside a carefully controlled research environment, where data could be collected on an ongoing basis to answer significant questions about the health consequences of genetic mutations and the potential benefits and risks of testing. Specifically, they argued that commercialization should wait because knowledge about an inherited predisposition to breast cancer was still emerging, and medical care options for mutation carriers were limited and not proven to be of benefit. In addition, data on the psychological and social effects on women who were tested were still evolving. Those in favor of restricting such testing to the research setting wanted laws in place to protect individuals from irresponsible testing practices, loss of privacy, and genetic discrimination. Details the decisions that Myriad and OncorMed made regarding their testing services and how the two companies addressed the concerns of those outside the company.