Phoenix Group has joined forces with Schroders to launch a new strategic partnership, Future Growth Capital, to unlock investment opportunities in private markets for millions of new pension savers.
Future Growth Capital (FGC) will, subject to all regulatory approvals, support the objectives of the UK’s Mansion House Compact, unlocking investment opportunities in private markets to enable pension savers to benefit from the diversification and investment return opportunities that unlisted assets can offer.
FGC aims to deploy an initial £1bn (€1.2bn) and £10-20bn over the next 10 years into UK and global private markets, the manager said.
Phoenix Group intends to invest 5% of its relevant savings products on behalf of its policyholders, in line with its Mansion House Compact commitment. This, FGC said, will provide “scale at inception, with ongoing fundraising led by both Schroders and Phoenix Group”.
The new investment manager will design and manage UK and global multi-private-asset solutions for UK insurance and pension clients to open up access to a broader range of innovative companies and investment opportunities for millions of UK pension clients.
Initially it will leverage Schroders’ pioneering Long-Term Asset Fund (LTAF) investment platform, providing investment advice to the fourth and fifth LTAFs planned for launch by Schroders’s dedicated private markets business, Schroders Capital, in the UK.
A key focus of FGC will be investing on behalf of pension savers to grow the UK’s companies of the future. The new firm will provide long-term financing for innovative, growing businesses, helping to create jobs and boost the UK economy.
As a major investor in the UK’s private markets, it will help to develop the UK private market ecosystem and to promote the UK as an attractive private market investment destination.
Chancellor of the exchequer Rachel Reeves said: “I welcome today’s multi-billion-pound announcement from Schroders and Phoenix Group, which will ensure that more of people’s pension savings are invested into the UK’s highest-growing companies.
“We want pension fund money to work harder for people and the economy. That’s why our pensions review will explore how we can unlock even more investment in the UK economy while boosting pension pots.”
Peter Harrison, group chief executive officer at Schroders, said: “The UK’s private companies are an untapped universe of investment opportunity. By stimulating investment into our private markets, our partnership will address the multiple challenges of the looming retirement crisis and boosting UK growth.
“By connecting long-term savers with our country’s most inventive companies, Future Growth Capital will help more people to fund a secure and comfortable retirement, whilst supporting businesses to grow and thrive right here in the UK. In doing so, we’ll be making the UK an even more attractive place to live, work, retire and invest.”
Andy Briggs, group CEO of Phoenix Group, said: “By forming FGC with Schroders, it will help us to deliver our goal of giving UK long-term savers a way to invest in a more diversified portfolio with the potential for higher returns, from a broader range of assets.
“This facility will also play a significant role in the future design of our flagship defaults. FGC will be a long-term, patient capital investment manager, constructed to ensure that customer protection remains at its core by taking a blended approach to asset allocation.”
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