Schroders and insurer Phoenix Group are launching a private markets manager that will promote the objectives of the U.K.’s Mansion House Compact, aiming to deploy up to £20 billion ($26 billion) in assets over the next decade.
Future Growth Capital will first deploy up to £2.5 billion over three years from Phoenix Group, a move that’s in line with the insurer’s Mansion House Compact ambition, a news release said. The initial commitment is £1 billion.
The firm will become a standalone business — subject to approvals — with an independent management team and board, but will be an extension of Schroders Capital’s private markets capabilities, a spokesperson said. The £74 billion private markets unit already has other businesses such as Schroders Greencoat, which invests in renewables.
Subject to regulatory approval, the new firm will invest in the U.K. and global private markets. Both Schroders and Phoenix Group will raise funds for the firm.
Future Growth Capital will design and manage U.K. and global multiprivate asset solutions for U.K. insurance and retirement clients. It will initially use Schroders’ long-term asset fund investment platform, providing investment advice to the fourth and fifth LTAFs that Schroders’ private markets business, Schroders Capital, plans to launch in the U.K.
A key aim will be to invest on behalf of defined contribution participants to grow the U.K.’s companies of the future — an ambition of the government’s, too.
“I welcome today’s multibillion-pound announcement from Schroders and Phoenix Group, which will ensure that more of people’s pension savings are invested into the U.K.’s highest growth companies,” said Rachel Reeves, chancellor of the exchequer, in the release. “We want pension fund money to work harder for people and the economy. That’s why our pensions review will explore how we can unlock even more investment in the U.K. economy while boosting pension pots.”
The Mansion House Compact was announced last July, with nine DC plans pledging to invest up to 5% of their default funds into private U.K. companies by 2030.
“The U.K.’s private companies are an untapped universe of investment opportunity,” said Peter Harrison, Schroders group CEO, in the release. “By stimulating investment into our private markets, our partnership will address the multiple challenges of the looming retirement crisis and boosting U.K. growth. By connecting long-term savers with our country’s most inventive companies, Future Growth Capital will help more people to fund a secure and comfortable retirement, whilst supporting businesses to grow and thrive right here in the U.K. In doing so, we’ll be making the U.K. an even more attractive place to live, work, retire and invest.”
There are about 35,900 medium-sized private companies in the U.K., the release added, compared with 1,900 listed on the London Stock Exchange.
