Border to Coast Pensions Partnership, one of the UK’s largest public sector pension pools with total assets worth £46bn (€52bn), has committed over £370m in five new private equity funds.
Since its launch, the Partnership received £3bn of private market commitments from its partner funds, of which £1bn was earmarked for private equity last year – £500m for its first offering (Series 1A) and a further £485m for its second offering (Series 1B), 75% of which is now committed, it announced. The new investments form part of Border to Coast’s second private equity offering (series 1B).
Mark Lyon, head of internal management at Border to Coast, said: “Private equity is an important asset class for our partner funds, providing a differentiated risk and return profile relative to public equity markets.”
He added that the Partnership’s experienced in-house team was able to “generate meaningful fee savings for our partner funds while accessing high-quality investment opportunities with capacity constrained managers.”
The five private equity funds include:
- KKR Asian Fund IV ($94m) – an Asian-focused buyout fund targeting upper mid-market and large-cap companies;
- Thoma Bravo Fund XIV ($100m) – a sector specialist buyout fund focused on ‘consolidation’ and ‘buy-and-build’ strategies in the software sector, predominantly in the US;
- Nordic Capital Fund X (€75m) – a European buyout fund targeting upper mid-market companies with sector specialisms in healthcare, technology and financial services;
- AlpInvest Co-Investment Fund VIII ($125m) – a global co-investment strategy focused on buyout and growth capital transactions;
- Endless Fund V (£50m) – a strategy focused on turnaround or distressed companies in the lower mid-market.
These commitments provide exposure to a number of Border to Coast’s targeted themes within private equity including operational value add, buy and build, mid-market, healthcare, technology, Asia, distressed and co-investments, it said.
The Partnership said investments are selected using an investment process focusing on investment and operational due diligence which is undertaken by the internal Border to Coast team and supported by third party service providers.
As part of the due diligence process, Border to Coast is developing longer-term relationships with key industry participants to enable partner funds to collectively benefit from their investments in private markets.
It also disclosed that the remaining commitments in Series 1B are expected to be deployed by 31 March 2021.
Additionally, Border to Coast has also appointed Cleveland & Co to provide advice in respect of the investments to be acquired by the Partnership across the private markets platform covering private equity, infrastructure, and private credit.
Cleveland & Co will review all investment documentation throughout the life cycle of each investment, advising on legacy transfers and secondary sales, and generally providing support and guidance to the private markets investment team.
The firm will also provide training to facilitate knowledge transfer to the legal and investment teams. The initial contract is for three years.