A new private markets investment manager has launched two diversified long-term asset funds (LTAFs) for pension scheme investors.
Future Growth Capital, which is backed by Pheonix Group and Schroders and intends to invest between £10bn and £20bn during the next decade, is offering a global fund and another focused on the UK.
And the latter has already made its first investment, which is in the tech and life sciences sector.
Both strategies, which were approved by the regulator in October, are actively managed and will invest in private equity, venture capital, real assets and private debt.
The target is that these funds will deliver a 10% return per annum, after fees, over the long term.
In what was a busy day for this market, Scottish Widows announced their intention to launch an open-architecture LTAF later this year, if the regulator approves.
Future Growth Capital’s global fund will focus on the US, Europe and Asia, while the UK fund will provide access to infrastructure projects, including the energy transition which needs around £900bn of investment to decarbonise the power system, according to the NatWest Energy Transition Report 2023.
The UK fund will also allow investors to diversify their public exposures given that 36% of the country’s largest 500 companies are now privately held.
The £500m UK fund received £250m from the British Business Bank last year, an investment which was matched by Phoenix.
The insurer and pensions provider intends to invest 5% of its relevant savings products on behalf of its policyholders through funds managed or advised by the investment manager.
Future Growth Capital’s chief executive, Paul Forshaw, said these strategies are designed to unlock private market investments for UK pension savers, efficiently and cost-effectively.
“By offering complementary global and UK LTAFs side by side we are giving investors the option to decide exactly what their UK and global private markets exposures should be, at a time when investment allocations to the UK are increasingly in focus.”
Chief investment officer Ped Phrompechrut described private markets as “essential building blocks” to deliver better pension outcomes.
“Often overlooked is that UK private markets are broader and deeper than many recognise and offer a rich seam of investment return potential,” he added.
“The UK is a hub of innovation, the third largest venture capital market in the world, and the leading supplier of unicorn businesses in Europe. There are great investment opportunities for investors, and we aim to capture these for UK pension savers, alongside providing access to a global strategy.”
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