• Schroders Capital now responsible for £1.5bn on behalf of Nest
• Nest’s private equity investment stands at around £2bn
• 18% (£381m) of Nest’s private equity investment is UK based
The fresh allocation strengthens the successful partnership which began in 2022 and brings Nest’s total committed capital to Schroders Capital’s private equity strategy to £1.5 billion.
Schroders Capital’s mandate is to invest in both established and young businesses at the forefront of innovation, in growth sectors such as artificial intelligence, healthcare, pharmaceuticals and technology across North America, Asia and Europe, including the UK.
A total of £1.5 billion has now been committed through the bespoke fund managed by Schroders Capital, feeding into Nest’s default ‘Retirement Date’ funds where the vast majority of its 13 million members save.
Nest and Schroders Capital share the belief that scaling up private market investments can not only drive stronger long-term return potential for members but also support growth in the UK economy. Across its portfolio, Nest has around £2 billion directly invested in unlisted equity, of which nearly all is invested through its default funds and around 18% (£381 million) is to UK companies.
Rachel Farrell, Director of Public and Private Markets at Nest Invest, has praised Schroders Capital in helping Nest’s members benefit from these types of high-value deals.
“Private equity deals offer exciting investment opportunities for our members. It’s right that they’re no longer out-of-reach of the average UK worker but a key component of their Nest pension.
“We want to keep growing our investment into this high-performing asset class. This supports our overall ambition – to expand our private market (illiquid) allocation to 30% AUM by 2030.
“We’re delighted to be partnering with Schroders Capital. They share our desire, as a UK based asset manager leading the way in private markets, to help British businesses grow and in turn create more jobs and opportunities for UK savers.
“What we’re seeing through both the Mansion House Compact and Accord is more appetite from institutional UK investors to access private equity. We’ve enjoyed being an early mover into the market and our challenge to Schroders Capital is keep up the hard work in what will become a more competitive market.”
Investors, like Nest, are increasingly turning to private markets to access attractive return and income opportunities, as highlighted within Schroders’ latest Global Investor Insights Survey. Across both public and private markets, private equity was selected as the most favoured asset class for return opportunities among institutional investors. With this, smaller, innovation-rich and domestically focused companies that are inaccessible via public markets can be less exposed to global trade disruptions and geopolitical tensions, and therefore, have the potential to also enhance portfolio resilience – a particularly pertinent factor in today’s market context.
Schroders Capital’s private equity platform has built a deep network of proven specialist managers, allowing them to unlock access to untapped growth and value creation opportunities that otherwise would be unavailable to Nest’s members. With a strategic focus on growth and buyout in the lower-mid market, Schroders Capital has built a globally diversified portfolio and successfully invested in over 25 companies across the UK, Europe, North America and Asia.
The combination of Nest’s ability to raise capital at pace with Schroders Capital’s specialisms has been key to sustaining robust deployment momentum.
Tim Creed, Head of Private Equity Investments, Schroders Capital, commented:
“There is a compelling opportunity for UK savers to invest in private markets and shape their futures: maximising their pensions whilst spurring the evolution of companies driving critical innovation and growth. The UK’s pensions industry is no doubt waking up to the private equity sector’s potential to drive value for individual savers, businesses and the broader economy, and it’s promising to see this being reflected in increasing investor sentiment.
“Success hinges on the expertise of specialist managers. We are uniquely positioned here – leveraging the reach and client network of the broader Schroders Group, combined with the specialist capabilities and proven track record of Schroders Capital.
“This further commitment from Nest not only strengthens our partnership but also serves as testament to the success of our strategy. We look forward to building on this momentum as we continue to unlock untapped opportunities for millions of savers across the UK.”
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