A private markets investment vehicle will be established by British insurer Phoenix Group and fund manager Schroders with the intention of investing up to £20bn ($25.68bn) in unlisted assets over the course of the next ten years.
Asset managers, such BlackRock and Amundi, have been vying for a competitive advantage in the private markets by acquiring specialised businesses to enhance their portfolios.
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Reported by Reuters, the two British enterprises stated that their new initiative, Future Growth Capital (FGC), will support the UK government’s goal of encouraging more pension funds to be invested in private companies.
With the intention of investing £2.5bn over the course of three years, Phoenix has committed an initial £1.5bn to the project.
The new Labour administration, which has stated that the country’s finances are overspent by £22bn, has supported the MHC and began a study of the pensions business in an effort to stimulate private investment.
Moreover, last July, then-finance minister Jeremy Hunt said that under the agreement, nine insurers and pension funds would voluntarily pledge to investing 5% of their direct contribution pension systems in unlisted companies by 2030.
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By GlobalDataAlexander Green, Co-Founder and Chief Commercial Officer, Globacap, commented: “It’s encouraging to see leading pension funds promoting the Mansion House Compact and increasing their investments in private firms. Over the past few years, there has been a noticeable shift from public to private markets. Just recently, Calpers, one of the largest pension funds in the world, announced plans to increase its private markets allocation to 40%, compared to the average pension fund allocation in private markets of just 8%, and other large asset allocators are following suit. This trend equates to billions of dollars in capital inflow for private markets in the short term and trillions over the next decade.
“Historically, investors like pension funds have struggled with private market transactions, which have been laborious, manual, and time-consuming, often taking weeks or months. However, over the past decade, private markets have increased funding, boosted liquidity, and embraced automation and technology, making them far more accessible and an attractive alternative to public markets.
“The UK is the leading tech hub in Europe and third in the world, boasting a tech sector with a combined market value of $1tn. The potential for profit from UK tech innovation is substantial. Encouraging pension funds to increase allocations into private markets gives the industry a boost and presents UK pensioners with a unique opportunity to profit from this sector.”
Company partnerships
Blackstone has completed a sizable financing capital investment to support controlling shareholder Reinold Geiger and related entities in a take-private of listed global multi-brand beauty and skincare group L’Occitane International.
This was completed with the help of Goldman Sachs Alternatives, Blackstone’s private equity strategy for individual investors, and funds handled by Blackstone Tactical Opportunities and its subsidiaries.
On 29 April 2024, the offeror launched a tender offer to purchase and delist the company for HK$34.00 ($4.35) per share, which represents a significant premium for shareholders.
The offer was backed by a pledge of up to €1.551bn ($1.680bn) from Blackstone and Goldman Sachs Alternatives.
