(Bloomberg) -- Schroders Plc and Phoenix Group Holdings Plc have agreed to establish a new investment management firm that will deploy billions of pounds in private assets on behalf of British pensioners.
The new entity, called Future Growth Capital, aims to invest anywhere between £10 billion ($12.8 billion) and £20 billion in the UK and globally over the next decade, according to a person familiar with the matter. Phoenix will make a significant initial allocation and both companies will then seek to raise more capital for scale, the person said, declining to be identified discussing private information.
Representatives for Schroders didn’t immediately respond to requests for comment.
The new investment manager, which is expected to have its own leadership, will use Schroders’ so-called long-term asset fund platform to invest and will also allocate money to innovative, growing UK businesses, the person added.
The plan to set up Future Growth Capital comes on the back of the UK’s push to get pension plans to deploy more of their capital in a way that boosts Britain’s economy as part of the Mansion House reforms. About a year ago, the government announced an agreement between nine of Britain’s largest pension providers — including Phoenix — that commits them to allocating 5% of assets in their default funds to unlisted stocks by 2030.
Schroders, Britain’s largest standalone money manager with £751 billion in assets at the end of 2023, won regulatory approval to set up the UK’s first LTAF early last year and has since created more such vehicles. It is planning to launch two more funds as part of the new firm. Schroders is among a growing group of asset managers looking to push deeper into private markets to compete against low-cost index fund providers that have eroded their businesses.
Phoenix is the UK’s largest long-term savings and retirement business with £280 billion of assets under administration.
©2024 Bloomberg L.P.
