Nest plans venture capital investment push for UK pension assets

Traders Union
All News
Financial News
Nest venture capital push

Highlights

Nest plans to invest up to £1bn in venture capital by 2030, starting with £200mn allocated to Schroders Capital.
Nest aims to raise private markets exposure from 19 per cent to 30 per cent of assets by 2030, with private equity at 5 per cent of Nest's £68bn AUM as of May.
In April, Nest announced a £450mn deployment into private credit loans through Crescent Capital, further expanding its private asset exposure beyond venture capital.

Private markets strategy through 2030

As reported by Financial Times, Nest is planning to invest up to £1bn in venture capital and has set aside an initial £200mn for Schroders Capital as the first step. The state-backed National Employment Savings Trust says the move forms part of a broader plan to raise private markets exposure from 19 per cent to 30 per cent of assets by 2030.

Nest, which has 14mn members and receives about £700mn in monthly contributions, says the latest allocation includes existing venture holdings and new capital for late-stage opportunities. These investments sit within a wider £1.5bn mandate with Schroders for private equity assets.

Mark Fawcett, chief executive of Nest Invest, says the scheme is seeking to capture high-growth opportunities by moving earlier in the private equity cycle through middle- and late-stage ventures. Nest adds that, if enough opportunities are available, the venture capital allocation would build to roughly £1bn by 2030.

UK pension industry implications

As of May, private equity accounts for 5 per cent of Nest's £68bn in assets under management, and about 44 per cent of its private asset investments are in the UK. Its holdings include Wayve, the autonomous driving company that was valued at $8.6bn in a February funding round and is due on Wednesday to become the first major company to sell shares on LSEG's new private markets system.

The strategy comes as UK ministers and City of London executives push for pension schemes to allocate more money to private markets in search of higher returns and stronger backing for British companies. At the same time, parts of private markets, including private credit, are facing investor unease over asset quality and risks for savers.

Nest is already widening its private asset exposure beyond venture capital. In April, it said it would deploy £450mn into private credit loans to U.S. companies through Crescent Capital, which manages $50bn in assets.

Venture capital has historically been a limited part of UK pension portfolios, particularly among defined benefit schemes, because of its small scale, uncertain returns and higher risk. Simeon Willis, chief investment officer at pension consultancy XPS in London, says defined contribution schemes are showing more interest in venture investing, though the trend remains at an early stage.

Britain’s June labour-market survey indicated the downturn is easing slightly, with temporary hiring strengthening even as permanent placements continued to fall. We previously reported that starting salaries picked up again, keeping wage pressures on the Bank of England’s radar as it assesses inflation risks amid softer business activity, particularly in services.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.