Nest appoints Schroders for £1.5bn private equity push

May 4, 2022 | News

Nest has today announced that it has entered into a new private equity partnership with Schroders Capital.

The new partnership will see the government-backed auto-enrolment provider and Schroders Capital -the private markets investment division of Schroders – join forces to help the third of the UK workforce currently saving with Nest, with approximately £24bn in assets, to invest in private equity.

The investments will be folded within Nest’s existing retirement fund. This will enable Nest members to benefit from the investments resting within the same existing structure.

Sourcing for investments at Schroders Capital has already commenced, with investments expected to focus on industries such as financials, consumer, technology and healthcare. Deals are expected to be sought in the UK and Europe as well as across the world, including in North America and Asia.

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The investments will have a specific focus on middle market deals, and it is expected that at least £1.5bn in funds will have been invested in private equity by 2025. The long-term target for the partnership is for around 5% of Nest’s total pensions portfolio to have been invested into private equity.

Nest chief investment officer Mark Fawcett commented that this partnership could be a ‘watershed moment’ for the private equity industry.

“Many UK workers, for the first time in their lives, will now have the chance to benefit from investing in private equity. At Nest we’ve developed a sophisticated investment strategy to help navigate changing market conditions, for when markets are buoyant and more importantly, when they’re not.”

He added: “Our move into private equity is just the latest evolution and has the potential to drive strong returns for our members, putting them into a better position for retirement. Schroders Capital have huge amounts of experience and expertise co-investing on these types of deals and their global scope offers up exciting opportunities.”

Schroders Capital head of private equity investments Tim Creed echoed this.

“In the past, private assets such as private equity, have been accessible only to large defined benefit schemes. Today’s announcement is further evidence that this is changing. A huge pool of UK pension savers will now be able to access this asset through Nest’s scheme and benefit from Schroders Capital’s long-standing investment expertise.”

He added: “We are excited to be at the forefront of this evolution as the democratisation of this asset class gathers pace. Our focus is committed to identifying and delivering investment performance in the growth and middle market space and helping secure the retirement futures of UK savers.”

Source: Professional Pensions

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