Douglas Hansen-Luke’s Post

Today, when I addressed the British Private Equity & Venture Capital Association (BVCA)’s UK Pensions Summit, I spoke about an issue at the very heart of our nation’s future: economic growth. A growing economy means more investment, more jobs, and more funding for public services.   At the City of London Corporation, we believe that the key to unlock economic growth is #pension capital. Pension capital can be more-effectively deployed to raise #investment levels across the country, benefitting everyone from savers and investors to young start-up businesses.   Just last Friday, the ‘Capital Markets of Tomorrow report’, authored by Sir Nigel Wilson, said that £100bn of capital was needed annually for the next decade to fund a “period of regeneration” that can support annual economic #growth of 3%. I believe that UK pension funds can be a critical supplier of that capital.   Last year, the City of London Corporation, in partnership with the then Chancellor and the sector, announced the signing of the Mansion House Compact. The Compact is a commitment by some of Britain’s largest pension firms to allocate a minimum of 5% of defined contribution (DC) funds to unlisted equities by 2030. The Mansion House Compact aims to unlock over £50 billion of new capital by the end of the decade. This is capital that can help our young businesses start, scale, and, crucially, stay in the UK. Our ambition is to deliver better returns for savers, support businesses, boost employment, and help unlock potential across the country.   Initially, nine of our largest DC pension schemes, representing two-thirds of the DC market, signed. I’m proud to say that today, we have 11 signatories to the Mansion House Compact. Just last month, with the Association of British Insurers (ABI), we published an update on the one-year anniversary of the Mansion House Compact. I’m pleased to report that 10 out of 11 firms have expanded or reallocated staff to support unlisted equity investments. And 8 out of 11 firms are developing new funds or vehicles, including Long-Term Asset Funds (LTAFs), to increase investment in private markets, early-stage companies, and private equity.   We must maintain the momentum we’ve built. We look forward to continuing to work together with partners including the BVCA, the ABI, and the pensions industry, to help the pensions system unlock capital. Capital that unlocks growth. And growth that unlocks opportunity for people and businesses, savers and pensioners, right across the entire country.   Find out more about the Mansion House Compact at https://lnkd.in/ezUyNXmz

Yesterday, the Chancellor announced new proposals which will allow the merger of Local Government Pension Scheme assets and the consolidation of defined contribution Pension Schemes. Future Planet Capital (FPC) is delighted to be working with NatWest Cushon, with a view to the Cushon Master Trust potentially making an investment in the British Co-Investment Fund (BCF). 💡 The BCF closely aligns with the Chancellor of the Exchequer’s vision under the Mansion House Reforms. 𝐀𝐢𝐦: To unlock large-scale investment in key British industries. 𝐀𝐜𝐜𝐞𝐥𝐞𝐫𝐚𝐭𝐞: Innovation and economic growth, emphasising the private sector’s pivotal role. 𝐒𝐮𝐩𝐩𝐨𝐫𝐭: UK’s most promising and high-impact technology businesses. NatWest Cushon has been keen to show its intent, subject to commercials and Trustee agreement, both with the British Growth Partnership and with Future Planet Capital’s British Co-Investment Fund. Both are key to getting more pension schemes to invest in UK assets. Lord Norman Foster, Chair of Future Planet Capital’s Advisory Board shared, “One of our most important tasks is to anticipate the future and find ways to have a positive impact on the wellbeing of people and the planet. We will need intellectual and financial capital to make that happen. This partnership supports the excellent work that is being done to invest in ground-breaking technologies which offer incredible potential.”    Douglas Hansen-Luke, Executive Chairman and Co-founder of Future Planet Capital, commented, “This collaboration enables British pension savers to support the next generation of British innovation, ensuring that UK capital not only backs but also benefits from the country’s technological and sustainable advancements.”   Julius Pursaill, Pensions expert and advisor to the Cushon Master Trust, said: “There are a number of good reasons to support the UK Growth agenda. Innovations like the British Co-Investment Fund play an important role in delivering on this objective by driving financial growth whilst also offering access to innovative, impact-focused sectors such as climate technology and artificial intelligence, which can help secure the future for pension savers and broader society." Read More in the Financial Times: https://lnkd.in/eFqnh8KY Rt Hon Rachel Reeves, HM Treasury, Richard Dilworth, Norman Foster Foundation, Priya Guha MBE, Matthew Hurn OBE, Paul Abberley, Jim Wilkinson, Stephen Watson, British Private Equity & Venture Capital Association (BVCA), Mobius, Nat Wei UK Innovation & Science Seed Fund | Midven #Pension #ukeconomy #announcement #NatWest #NatWestCushon

The UK government’s plans to mobilise up to £80bn in pension fund capital into “megafunds” could fill a void in the country’s tech sector, say startup groups and investors. The government has said it’s looking to “mirror” set-ups in Canada and Australia, which have long been lauded for pumping cash into private businesses. Canadian Pension Plan Investments invested $300m in UK scaleup Octopus Energy in 2021, larger than the total investment by UK pension funds into UK startups in all of 2022. Australian pension funds invest 10 times more in private equity companies compared to DC funds in the UK, according to the government. Germany also recently announced a pension fund-backed initiative to pour €12bn into its startup scene. In the US, pension funds invested $7.7bn into VC in 2023.

Nest Launches £1bn Investment Platform for UK BTR Sector Nest pensions, the government-backed auto-enrolment pension provider, has entered into a groundbreaking partnership with Legal & General (L&G) and Dutch pension fund PGGM Investments to drive substantial investment in the UK’s build-to-rent (BTR) sector. This strategic collaboration will establish a £1 billion investment platform aimed at accelerating the development of high-quality rental properties across the country. The partnership will launch with an initial combined investment of £350 million, highlighting the partners’ strong commitment to the UK BTR market. This sizeable initial funding underscores their confidence in the sector’s long-term potential and growing importance. The platform’s primary focus will be on developing and acquiring rental properties throughout the UK, particularly in key urban areas where demand for quality housing is on the rise. With the UK facing significant housing shortages, this initiative comes at a critical time. By creating thousands of new rental homes, the partnership will help to alleviate housing pressures in areas with severe supply deficits. The focus on BTR schemes presents an opportunity to meet the growing demand for rental accommodation and contribute to resolving the country’s ongoing housing crisis. This collaboration also marks an important move by institutional investors into the residential property market, highlighting the increasing appeal of BTR as a long-term asset class. With pension funds and other large-scale investors recognizing the potential for stable returns, the partnership is poised to have a lasting impact on both the housing market and the investment landscape. The combined expertise and resources of Nest, L&G, and PGGM will enable the partnership to scale quickly and deliver results. L&G’s existing BTR platform, with a pipeline of nearly 2,000 homes and a target of 6,000 more in planning, development, or operation, provides a strong foundation for this collaboration. The partnership’s scale and ambition signal a significant development for the UK’s BTR sector, with the potential to accelerate the delivery of much-needed rental housing while generating long-term benefits for pension fund investors. https://lnkd.in/eznZMRAX

💼 🇬🇧 UK's £80 billion Pension Mega-Fund Plan: A Game-Changer for Private Markets!  The UK government has unveiled a transformative initiative to consolidate pension funds into eight mega-funds, unlocking an estimated £80 billion, ($102 billion) in investment capital. Here's a breakdown of the key points, based on Emily Lai's informative reporting for PitchBook:  📌 Highlights of the New Pension Reform:-    - The Pension Schemes Bill: Proposed by Rt Hon Rachel Reeves, the bill aims to pool assets from 86 Local Government Pension Scheme (LGPS) authorities in England and Wales.   - Total Assets Under Management: By 2030, the consolidated funds are expected to oversee £500 billion in assets, boosting their ability to invest in private equity and venture capital.   - Improved Returns: According to government data, funds managing assets between £25 to £50 billion achieve better returns by diversifying into higher-growth assets.   💬 Industry Reactions:-   - Alliott Cole, CEO of Octopus Ventures:    “This will provide UK entrepreneurs with additional funding sources, driving economic growth.”   - Michael Moore, CEO of British Private Equity & Venture Capital Association (BVCA):    “Consolidated funds can invest in private capital funds that support UK businesses and deliver strong returns for savers. Speed of implementation will be crucial.”   - Anne M. Glover, CEO of Amadeus Capital Partners:    “This is promising, but success hinges on recruiting high-quality asset allocators and accommodating venture capital fee structures.”  💷 What This Means for Private Markets:-    1️⃣ Boost to Domestic Investments: Larger pension pools will likely direct more capital into UK startups and high-growth businesses.   2️⃣ Enhanced Capital Efficiency: Access to venture capital and private equity improves, supporting innovative industries like tech and life sciences.   3️⃣ Challenges: Smaller funds may face exclusion due to larger ticket sizes, and reforms must ensure riskier asset classes are handled effectively.  🕰️ Historical Context:-    - Reeves’ proposal builds on reforms like the Mansion House Compact (2023), introduced by her predecessor, Jeremy Hunt.   - The Compact required pension providers to allocate 5% of assets in default funds to unlisted equities by 2030, laying the groundwork for today’s reforms.  🌟 A Word about the Author:-   This insightful coverage is brought to us by Emily Lai, a London-based reporter for PitchBook, with extensive experience in private equity and public markets across Europe and the Middle East.  💬 What’s Your Take?   Will this monumental shift transform the UK’s private markets? #entrepreneur #investor #UK #Business #Financial #Markets #Pension #Funding #EconomicGrowth #Innovation #Startups #Leadership #PensionReform #PrivateEquity #VentureCapital #PolicyChange #InvestmentStrategy #CapitalMarkets #Entrepreneurship #WealthManagement #Tech #Innovation #Sustainability 

The UK government’s plans to mobilise up to £80bn in pension fund capital into “megafunds” could fill a void in the country’s tech sector, say startup groups and investors. This evening, in an address to business leaders at Mansion House in London, the UK finance minister Rachel Reeves will announce plans to consolidate fragmented pension fund schemes across the country to boost investment into new businesses and critical infrastructure — including VC funds. The idea of tapping into pension funds to increase funding for private companies first came under the previous UK government, when it announced that major defined contribution (DC) funds had agreed to raise investment in UK businesses. While that was a voluntary commitment from some pension fund companies, Reeves’s proposed reforms are a commitment to make significant regulatory change. “Pension fund reforms are one of the biggest growth levers the Treasury can pull,” says Dom Hallas, Executive Director of lobby group Startup Coalition. “Once it’s delivered we should see billions more into the British venture-backed tech ecosystem — which is not only good for founders, it’s good for the pensions of British workers too.” Full story here: https://lnkd.in/eRRQPDk3

🔬 Knowledge of VC: The Case for UK Pension Funds to Invest in Private Assets 📈   With better expert knowledge and understanding, the UK pensions industry has a unique opportunity to drive better returns for savers as well as boosting growth in the wider economy by supporting businesses with high growth potential.   In this interesting blog for the London Business Review, Juanita Gonzalez Uribe (The London School of Economics and Political Science (LSE)) and Robyn Klingler-Vidra (King's College London) set out their views that improving venture capital literacy within pension funds is a key step in improving UK pension fund returns and stimulating the UK’s investment ecosystem.   Some key takeaways: 💷 Venture capital returns are highly skewed and persistent. It’s not just about investing in VC: it’s about investing in the right funds and engaging as high-quality limited partners. Done well, VC investment can provide strong returns and additional diversification.   📈Evidence from the US shows that investment ecosystems grew as a result of US state pension schemes staggered adopting of ‘prudent man rules’ – a rare natural experiment with clear results. Annual VC commitments grew by roughly 50% vs out of state funds.   🧠The small size of some VC funds could present a challenge – with pension schemes needing to allocate to multiple managers. Having the brainpower and experience to assess these or to put in place appropriate pooling structures such as fund of funds is key to getting a good return.   ⛓️💥Mandating allocations doesn’t work – investors must be free to select the best investment opportunities from the widest pool of investments – but pension investors need the knowledge and confidence to be able to do so.   This very much aligns with the recommendations made by the British Private Equity & Venture Capital Association (BVCA) in response to the government’s Pensions Review, coming out of the work of the Pensions and Private Capital Expert Panel over the past year.    #VentureCapital #Research #Pensions #EconomicGrowth Kerry Baldwin, Tom Taylor, Chris Elphick, Michael Moore, Karim Palant

In a new LSE Business Review article, Juanita Gonzalez Uribe and I emphasize the need for UK pension funds to be better equipped to invest in venture capital, warning that simply mandating pension allocations without sufficient expertise could lead to poor outcomes. Although the government's calls for pension fund investments in VC could significantly boost the UK's innovation-driven growth, the success of such investments depends on pension managers having the right knowledge and capabilities. Training in venture capital literacy is critical to ensure that pension funds act as "smart money," making informed decisions and supporting high-quality venture capital managers. Without this, forced allocations may yield low returns and miss opportunities to support emerging and innovative funds. #venture_capital #innovation #pension #reform Thanks for reposting Suzi Gillespie cc: King's Business School TechCrunch WIRED UK British Private Equity & Venture Capital Association (BVCA) The London School of Economics and Political Science (LSE) Financial Markets Group

🚀 Excited to share our latest piece with Robyn Klingler-Vidra! We dive into how UK pension reform can unlock innovation-led growth and why boosting VC literacy is key to making it happen. 📈💡 #Innovation #PensionReform #UKGrowth #VCLiteracy #LSE #startups

📰 #PlaceBased #ImpactInvesting (#PBII) Reporting Framework gains traction with the release of London Pensions Fund Authority report. The London Pensions Fund Authority (LPFA), a £7.8 billion Local Government Pension Scheme (LGPS) Fund, recently released its inaugural ‘Investing in the UK’ report, developed in partnership with The Good Economy and Local Pensions Partnership Investments. The report uses our PBII Reporting Framework - developed with a group of LGPS and asset managers - to offer a comprehensive overview of the geographical distribution and specifics of the Fund’s UK real estate and infrastructure investments. Key findings include: ➡️ Around 13% of the LPFA’s portfolio is already invested in local communities around the UK ➡️ The LPFA is invested in over 250 properties, ports, hotels, warehouses, trains, wind and solar farms and other assets across the UK. ➡️ Over 70% of their UK infrastructure and real estate investments by value are outside London. ➡️ They are invested in over 100 clean energy investments, most of which are in Wales, Scotland and the East Midlands. ➡️ 80% of the LPFA’s housing investments by value are in London with the rest in the South East. The LPFA joins a group of progressive local government pension funds including South Yorkshire Pension Fund (SYPA), Clwyd Pension Fund and Greater Manchester Pension Fund (GMPF), who all recognise the role the PBII Reporting Framework can play in directing UK pension money to deliver more inclusive and sustainable development at home. Read the LPFA's full report and get in touch to discuss the benefits of adopting the PBII Reporting Framework in your organisation. #ImpactReporting #SustainableDevelopment #LevellingUp #PensionFunds #AssetManagers #ImpactInvesting