Scottish pension fund takes Federated Hermes to court over ‘existential gamble’ on wind farms
Aberdeen City Council is taking Federated Hermes to court over an investment in Swedish wind farms which, it alleges, lost $117mn or 83 per cent of the total investment (Emily Macinnes/Bloomberg)
The North East Scotland Pension Fund is claiming damages which could amount to more than $134mn after the “disastrous” financial performance of a portfolio of wind farms in Sweden, in a legal case in London’s High Court between Aberdeen City Council and Federated Hermes.
Hermes, as NESPF’s alternatives manager, chose to invest around $121mn of fund assets in the Ventus Portfolio in 2019. Subsequent equity injections were made up to a total investment of $140mn.
As at September 30 2025, NESPF’s investment was worth $23mn - a loss of $117mn or 83 per cent.
Thor, Odin, Valhalla, Big Zlatan and Small Zlatan (the five wind farms) had failed to live up to their prodigious namesakes (we asked Hermes whether the last two of these were named after the Swedish footballer Zlatan Ibrahimović but they were unable to confirm).
The reason for this is that four of the five wind farms had committed to providing a certain amount of electricity and, should they not generate it themselves, they would have to buy energy to sell to the grid during a period when prices were high due to the fact little electricity was being generated.
The NESPF described this as an “existential gamble on power generation risk and electricity price risk”.
The investment had been allocated through the pension fund’s core portfolio, meaning it should be conservative with highly assured, lower volatility returns over a long duration.
But Ventus, NESPF claims, was “structured in a highly risky manner”.
Matters were made worse by Covid-19 and Russia’s war in Ukraine.
“This was an investment which no competent infrastructure investment manager would have made,” NESPF claims.
NESPF estimates it paid more than $3.3mn in manager fees and expenses to Hermes, on top of the $117.5mn loss on its original investment.
It is also claiming the amount of return it could have expected had the same capital been allocated to other core investments, at a rate of 7.5 to 10 per cent. It also claims a net loss of around $45mn and forfeited returns from Hermes in its role as general partner.
Aberdeen City Council and Hermes declined to comment.