Brunel selects Neuberger Berman for private equity vehicle with 40% impact weighting

21 October 2023

Brunel has selected Neuberger Berman to manage its third cycle private equity portfolio, which will operate under the name NB Clifton Private Equity III. The bespoke vehicle will have £626m of capital to commit.

The strategy will commit 40% to impact investments contributing to solutions for society and the planet, while the remaining 60% will be invested according to Brunel’s Responsible Investment Policy.

“Private equity has always appealed to our clients as a diversifying asset class with attractive risk-return characteristics,” said Jaime Alvarez, Portfolio Manager, Private Equity at Brunel. “Private equity also offers a particular opportunity to fulfil our clients’ Responsible Investment ambitions, both through investing with managers that incorporate robust ESG processes, and through increasing our allocation to the rapidly-growing impact investing asset sub-class. We already know Neuberger Berman well and trust its ability to select investments that are not only financially sound but also impactful.”

Existing partnership

The partnership between Brunel and Neuberger Berman dates back to 2019, when Brunel made a cornerstone $60m commitment to the Neuberger Berman Private Equity Impact Fund on behalf of four LGPS clients, as well as an anchor commitment to NB Private Equity’s flagship co-investment fund. In 2021, it awarded Neuberger Berman a £1.3bn climate transition-linked multi-asset credit mandate and committed £175m to NB Private Debt IV, a senior direct lending fund.

The expansion of this relationship enables Brunel to implement its third vintage private equity portfolio. Neuberger will help Brunel commit most of the capital to third-party primary funds; opportunistic secondaries and co-investments will be made via Neuberger Berman’s commingled funds.

Crucially, the new allocation includes a 40% target to impact investments, in line with Brunel and Neuberger’s shared agenda of investing in the new post-transition economy now. These impact investments must meet a range of social and climate priorities, and Neuberger has strong credentials in ESG integration and impact investing across private equity.

“Private equity continues to provide an all-important source of diversification for institutional investors and opportunities for long-term value creation, which will be critical for delivering on LGPS investment objectives,” said Ed Jones, head of UK institutional client business at Neuberger Berman. “For more than 35 years Neuberger Berman has built a well-resourced, experienced, and diverse team of private equity investment talent who source and manage a steady flow of high-quality investments on behalf of clients – it is pleasing that this expertise continues to be recognised. We thank Brunel for their ongoing collaboration across both private equity and fixed income to date.”

Source: Brunel Pension Partnership