Federated Hermes and BT Pension Scheme announce $1 billion private equity mandate

18 May 2022

Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, has been awarded a $1 billion private equity mandate from BT Pension Scheme (BTPS), one of the UK’s largest occupational pension schemes.

The mandate, called Horizon III, will be managed by Hermes GPE LLP, a specialist global private equity investor and wholly owned subsidiary of Federated Hermes, and will be invested over three years.

Horizon III will pursue the global thematically diversified strategy through a proven 50/50 funds and direct co-investment model established following similarly sized investment allocations managed for BTPS — Horizon I (2015) and Horizon II (2018).

Hermes GPE has invested more than $11 billion across almost 300 funds and more than 260 co-investments. Its thematic investment strategy focuses on generating risk-adjusted returns by exploiting the opportunities created by four global economic megatrends largely independent of underlying economic cycles: the net zero economy; accelerating technological innovation; demographic and societal change; and the global centre of gravity shift. This approach has to date delivered consistent risk-adjusted returns for BTPS.

J. Christopher Donahue, president and chief executive officer at Federated Hermes commented: “BTPS is an important customer across our private markets platform and the Horizon III mandate demonstrates BTPS’s continued confidence in the ability of Federated Hermes to deliver its investment objectives in a very competitive global private equity market.

Morten Nilsson, chief executive officer for BT Pension Scheme Management commented: “The Horizon mandates have delivered consistent, sustainable returns for the Scheme throughout market cycles. Horizon III demonstrates our continued commitment to this asset class with investments that meet our long-term sustainability goals.”

Peter Gale, chief investment officer and head of Hermes GPE, commented: “We have been constructing private equity portfolios for BTPS since the 2000s, which showcases our pension scheme roots. Our dynamic investment approach combines top-down macroeconomic considerations with bottom-up detailed research that clearly resonates with BTPS and we work closely with its investment team to ensure private equity plays an effective role in the Scheme’s asset allocation strategy.”

Source: Federated Hermes