UK £280 Billion Savings & Retirement Phoenix Group & $956 Billion Schroders Form Partnership to Launch Future Growth Capital to Support UK Mansion House Compact Goals with Phoenix to Invest an Initial £1 Billion, Up to £2.5 Billion Over 3 Years and a Total of £10 Billion to £20 Billion into Private Markets Over the Next 10 Years into UK & Global Private Markets, Both Phoenix Group & Schroders Will Conduct Ongoing Fund Raising for Future Growth Capital
31st July 2024 | Hong Kong
UK savings & retirement Phoenix Group with £280 billion AUM ($359 billion AUM) & investment manager Schroders with $956 billion AUM have formed a partnership to launch Future Growth Capital (FGC) to support UK Mansion House Compact goals with Phoenix to invest an initial £1 billion, up to £2.5 billion over 3 years and a total of £10 billion to £20 billion into private markets over the next 10 years into UK & global private markets (1 GBP = 1.28 USD). Both Phoenix Group & Schroders will conduct ongoing fund raising for Future Growth Capital (FGC). Announcement (31/7/24): “Phoenix Group, the UK’s largest long-term savings and retirement business with 12 million customers, and Schroders, the global investment manager with a £74bn private market capability, today announce their agreement to form a new strategic partnership, Future Growth Capital. Future Growth Capital (FGC) will, subject to all regulatory approvals, support the objectives of the UK’s Mansion House Compact, unlocking investment opportunities in private markets for millions of new pension savers to benefit from the diversification and investment return opportunities that unlisted assets can offer. FGC aims to deploy an initial £1bn and £10-20bn over the next 10 years into UK and global private markets. Phoenix Group intends to invest 5% of its relevant savings products on behalf of its policyholders, in line with its Mansion House Compact commitment. This will provide scale at inception, with ongoing fundraising led by both Schroders and Phoenix Group. The new investment manager will design and manage UK and Global multi-private asset solutions for UK insurance and pension clients to open access to a broader range of innovative companies and investment opportunities for millions of UK pension clients. Initially it will leverage Schroders’ pioneering Long-Term Asset Fund (LTAF) investment platform, providing investment advice to the fourth and fifth LTAFs planned for launch by Schroders’ dedicated private markets business, Schroders Capital, in the UK. A key focus of FGC will be investing on behalf of pension savers to grow the UK’s companies of the future. FGC will provide long-term financing for innovative, growing businesses, helping to create jobs and boost the UK economy. As a major investor in the UK’s private markets, it will help to develop the UK private market ecosystem and to promote the UK as an attractive private market investment destination.”
“ UK £280 Billion Savings & Retirement Phoenix Group & $956 Billion Schroders Form Partnership to Launch Future Growth Capital to Support UK Mansion House Compact Goals with Phoenix to Invest an Initial £1 Billion, Up to £2.5 Billion Over 3 Years and a Total of £10 Billion to £20 Billion into Private Markets Over the Next 10 Years into UK & Global Private Markets, Both Phoenix Group & Schroders Will Conduct Ongoing Fund Raising for Future Growth Capital “
Chancellor of Exchequer Rachel Reeves: “I welcome today’s multi-billion-pound announcement from Schroders and Phoenix Group, which will ensure that more of people’s pension savings are invested into the UK’s highest growing companies. 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 UK economy while boosting pension pots.”
Peter Harrison, Group CEO, Schroders: “The UK’s private companies are an untapped universe of investment opportunity. By stimulating investment into our private markets, our partnership will address the multiple challenges of the looming retirement crisis and boosting UK 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 UK. In doing so, we’ll be making the UK an even more attractive place to live, work, retire and invest.”
Andy Briggs, Group CEO, Phoenix Group: “For too long, pension savers in the UK have received lower returns than their counterparts in the P7 such as Australia and Canada, partly because the UK allocates much less capital to private market assets than other developed countries. By forming FGC with Schroders, it will help us to deliver our goal of giving UK long-term savers a way to invest in a more diversified portfolio with the potential for higher returns, from a broader range of assets. This facility will also play a significant role in the future design of our flagship defaults. FGC will be a long-term, patient capital investment manager, constructed to ensure that customer protection remains at its core by taking a blended approach to asset allocation.”
UK Mansion House Compact – This compact is a voluntary expression of intent by founding signatories to take action to secure better financial outcomes by facilitating access to the higher potential net returns that can arise from investment in unlisted equities as part of a diversified portfolio, acting consistently with the best interests of UK long-term savers. By signing this compact, founding signatories express an intent, on a voluntary basis, to take meaningful action within 12 months to secure better outcomes for UK long-term savers through facilitating access to the higher net returns that can arise from investment in unlisted equities, which will also benefit high-growth UK companies including but not limited to those operating in fintech, life sciences, biotech, and clean technology sectors. The intention to achieve a minimum 5% allocation to unlisted equities through DC pension funds, and other sources of long-term savings, signals a bold ambition to unlock over £50bn of capital by 2030. The long-term support of the UK Government, and of the relevant regulatory authorities, will be a key enabler to achieving the intent of this compact. Founding signatories note the recent and ongoing initiatives on pension reform, and highlight the requirement for further policy, legislative and regulatory changes to not only address the technical barriers that hinder investment in unlisted equities at scale but also the immediate and broader structural challenges. A progressive set of reforms could include incentives, addressing fragmentation, enhancing operating frameworks and facilitating a sustained cultural shift to risk and reward to further embed the principle that the future financial interests of UK long-term savers is a result of maximising risk adjusted net returns, including value over cost, to deliver better outcomes. Depending on what will best serve their savers, signatories will invest in a variety of existing or new investment vehicles to fulfil their commitment. For some, including smaller institutional investors, there will be value in a joint vehicle as means for them to further their investment in unlisted equities.
Consistent with the supporting actions of Government and acting in the best interest of our savers, founding signatories commit:
- to increase the proportion of UK pension and other relevant assets, including DC default funds, invested in unlisted equities
- to the objective to allocate at least 5% of DC default funds to unlisted equities by 2030 in a way that is consistent with the requirement to act in the best interests of our savers
The full benefits of Future Growth Capital (FGC)
A partner for UK pension savers – Longer lifetimes and low savings rates mean that more than half of UK Defined Contribution (DC) savers are currently not on track to meet the PLSA’s minimum retirement living standard. Private markets offer pension and other long-term savers much-needed diversification and the potential for higher investment returns to help boost their retirement incomes. To benefit UK pension savers and access the returns from private markets, FGC will launch UK and Global LTAFs, offering diversified exposure to a broad range of UK and global private market opportunities. FGC’s solutions will aim to deliver superior returns to pension savers, allowing them to invest efficiently and with confidence.
A partner for UK business – FGC will also align with the aims of the Mansion House Compact, of which Phoenix is a signatory and which Schroders endorses, by connecting the long-term investment needs of pension savers with the long-term financing needs of the UK’s most innovative companies. There are approximately 35,900 medium sized private companies in the UK, compared to just 1,900 companies listed on the London Stock Exchange. The UK is a centre for technological and industrial innovation, but there is a shortage of home-grown financing to support new, emerging businesses. FGC will invest in the UK’s businesses of the future, providing the long-term financing they need to grow and remain in the UK. FGC will support the goals of the Capital Markets Industry Taskforce (CMIT), of which both Schroders and Phoenix are committed supporters.
Championing the UK – FGC will also promote the UK as an attractive private market investment destination internationally and spotlight the many world-leading private companies that we have. This builds upon the recently announced partnership between Schroders, Phoenix Group and the British Business Bank to support the government’s Long- term Investment for Technology and Science initiative, which aims to stimulate venture and growth investment in the UK’s life science and technology companies.
Schroders plc – Schroders is a global investment management firm with £750.6 billion (€866.2 billion; $956.9 billion) assets under management, as at 31 December 2023. Schroders continues to deliver strong financial results in ever challenging market conditions, with a market capitalisation of circa £7 billion and over 6,400 employees across 38 locations. Established in 1804, the founding family remains a core shareholder, holding approximately 44% of Schroders’ shares. Schroders has benefited from a diverse business model by geography, asset class and client type. It offers innovative products and solutions across four core businesses; Public Markets, Solutions, Wealth Management and our private markets business Schroders Capital. Clients include insurance companies, pension schemes, sovereign wealth funds, high net worth individuals and foundations. Schroders also manages assets for end clients as part of its relationships with distributors, financial advisers and online platforms. Schroders aims to provide excellent investment performance to clients through active management. It also channels capital into sustainable and durable businesses to accelerate positive change in the world. Schroders’ business philosophy is based on the belief that if we deliver for clients, we will deliver for our shareholders and other stakeholders.
Schroders Capital – Schroders Capital provides investors with access to a broad range of private market investment opportunities, portfolio building blocks and customised private market strategies. Its team focuses on delivering best-in-class, risk-adjusted returns and executing investments through a combination of direct investment capabilities and broader solutions in all private market asset classes, through comingled funds and customised private market mandates. The team aims to achieve sustainable returns through a rigorous approach and in alignment with a culture characterised by performance, collaboration and integrity. With $93.7 billion (£73.5 billion; €84.8 billion)* assets under management, Schroders Capital offers a diversified range of investment strategies, including real estate, private equity, secondaries, venture capital, infrastructure, securitised products and asset-based finance, private debt, insurance-linked securities and BlueOrchard (Impact Specialists).
About Phoenix Group – Phoenix Group is the UK’s largest long-term savings and retirement business with £280 billion of assets under administration. As life expectancy continues to increase and the pension landscape continues to shift, we offer our 12 million customers a broad range of pensions, savings and life insurance products across our family of brands which include Standard Life, SunLife, Phoenix Life and ReAssure. Our vision is to help even more people on their journey to and through retirement, providing the right support at the right time. We are a growing and sustainable business united by a common purpose – helping people secure a life of possibilities. This drives everything we do and means taking responsible and sustainable investment decisions, and using our presence and voice to drive forward change for the better, for our customers, our colleagues, and our wider community. A FTSE 100 company, we also feature in the FTSE100 ESG Select Index series and we are playing an active role in helping to invest in a sustainable future. As part of this, we have committed to our operations being net zero carbon by 2025 and for our investment portfolios we have set an interim target of a 50% reduction in the carbon emission intensity of c£250bn by 2030, as we progress towards our portfolios being net zero carbon by 2050 or sooner. We have been recognised as a leading employer for many years. We are accredited as a Living Wage Employer, Living Pension Employer and as a Carer Positive Exemplary Employer for offering the best support to colleagues who are carers.
UK £280 Billion Savings & Retirement Phoenix Group & $956 Billion Schroders Form Partnership to Launch Future Growth Capital to Support UK Mansion House Compact Goals with Phoenix to Invest an Initial £1 Billion, Up to £2.5 Billion Over 3 Years and a Total of £10 Billion to £20 Billion into Private Markets Over the Next 10 Years into UK & Global Private Markets, Both Phoenix Group & Schroders Will Conduct Ongoing Fund Raising for Future Growth Capital
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