Nest to invest 5% of assets in private equity

The defined contribution scheme, with assets worth £20bn, has launched a tender for private equity managers, with the goal of investing in companies that are growing and seeking new capital to help fund that expansion.

Stephen O’Neill, head of private markets at Nest, said: “Over the next 20 years we’re expecting to invest around £80bn on behalf of our members. We want private equity to play an important role in our portfolio, offering strong returns and diversification.”

He continued: “We’ve had some great conversations with fund managers during our market warming exercise and I’m delighted to now formally launch this procurement. As ever, we’re looking for bidders to present global solutions that will be evergreen and scale with Nest over time.”

Despite keeping its options open regarding the number of appointments, the master trust is anticipating hiring two or three fund managers, it said.

Successful managers will need to demonstrate they can offer high-quality and evergreen investment processes, a robust risk management framework and integration of environmental, social and governance factors into their investment and asset management processes, Nest detailed.

For the past couple of years, the master trust has steadily added private market assets into its portfolio, from issuing private credit to mid-sized companies to investing directly into infrastructure projects.

This new mandate will be added to the existing range of ‘building block’ funds that make up the scheme’s default strategy — the Retirement Date Funds.

Schemes are being pushed into adding more illiquid investments to their portfolios, with the prime minister and the chancellor of the exchequer writing to pension funds earlier in August urging them to invest more in long-term UK assets with the goal of fuelling the recovery of the post-pandemic economy.

This article originally appeared on MandateWire.com