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Impact Investing

IPE special report May 2018

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Major pension schemes back Hermes PE co-investment fund

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The UK’s Local Pensions Partnership (LPP) has joined major pension funds from North America and Australia in committing assets to private equity investor Hermes GPE’s co-investment platform.

The Hermes GPE PEC III Co-Investment Fund LP (PEC III) raised total commitments of $389m (€330m) from a group of investors that includes, besides LPP, the State Teachers’ Retirement System of Ohio, Canada Pension Plan Investment Board, and Australian superannuation fund Hostplus.

Private equity firm Ardian and a number of other UK and continental European investors are also involved.

Including “sidecar” and segregated co-investment mandates, Hermes GPE has raised around $620m in total for the co-investment platform. The latter mandates come from longstanding Hermes GPE clients and will either invest alongside PEC III, or in separate co-investment and alternative strategies.

PEC III has already committed $200m to 30 investments. The fund follows a thematic investment strategy, seeking to identify companies in niche markets or geographies where growth potential does not hinge on the wider macroeconomic cycle.

Investors in the fund will contribute deal flow from their own private equity relationships alongside opportunities sourced from Hermes GPE’s network of general partner relationships.

Hermes GPE is part of Hermes Investment Management – the asset manager wholly owned by the BT Pension Scheme – and currently manages around $5bn of private equity assets. 

LPP is a £12.8bn (€14.3bn) collaboration between the London Pensions Fund Authority and Lancashire County Pension Fund. The Royal County of Berkshire Pension Fund provisionally agreed to join LPP but has yet to invest significantly in the pooled funds the partnership has launched so far. 

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