Phoenix Group, the UK's leading savings and retirement firm, has joined forces with FTSE 100 asset manager Schroders to launch a new venture aimed at channeling more pension funds towards thriving private companies.
The partnership, unveiled on Wednesday, has birthed Future Growth Capital (FGC), a dedicated investment manager designed to align with the ambitious goals of the Mansion House Compact. This set of reforms, spearheaded by former Conservative Chancellor Jeremy Hunt, seeks to encourage pension funds to direct a greater proportion of their assets towards private businesses.
Phoenix is demonstrating its commitment to this initiative with an initial investment of £1 billion in FGC, setting a target of deploying up to £2.5 billion over the next three years. FGC will focus on backing promising companies both in the UK and internationally, aiming to invest between £10 billion and £20 billion in private markets over the next decade.
The Mansion House Compact has emerged as a key catalyst for revitalising Britain's capital markets, garnering widespread support from business leaders, investors, and the newly elected Labour government. Its overarching aims include overhauling a risk-averse pension system, reversing the decline in London listings witnessed over recent years, and fostering a robust domestic funding environment for start-ups to flourish and scale within the UK.
Labour Chancellor Rachel Reeves has wholeheartedly welcomed the establishment of FGC, stating that "we want pension fund money to work harder for people and the economy." The government is also actively pursuing its own review of the pensions system, which will "explore how we can unlock even more investment in the UK economy while boosting pension pots," she added.
Schroders, a global asset manager with £750 billion in assets under management, including £74 billion overseen by its dedicated private markets arm, Schroders Capital, is bringing its extensive expertise to the venture. Peter Harrison, Schroders' chief executive, highlighted the immense potential of UK private companies, describing them as "an untapped universe of investment opportunity."
Phoenix, among nine of the UK's largest pension providers to pledge their support for the Mansion House reforms, has committed to allocating 5 per cent of its default funds for defined contribution pension plans to unlisted equities by 2030. This bold move signifies the growing recognition of private markets as a valuable avenue for long-term pension growth.
The collaboration between Phoenix and Schroders, fuelled by the Mansion House Compact, promises to unlock a significant wave of investment into UK private companies. By directing pension funds towards this burgeoning sector, the initiative holds the potential to fuel innovation, create jobs, and contribute to the UK's economic prosperity.
