NEST, the UK’s master trust with assets under management worth £8.3bn (€9.8bn) as of the end of September, has launched a new procurement inviting fund managers to tender for unlisted/direct infrastructure equity funds.
The pension scheme “believes private infrastructure equity investments can offer huge opportunities for its 8.5 million members and is asking fund managers to submit ways in which NEST can access the asset class”, it stated.
Stephen O’Neill, head of private markets, said: “Private infrastructure equity is something we’ve been reviewing and have considered the value it could bring to our investment portfolio.”
He added that “when chosen and managed carefully unlisted infrastructure equity typically offers stable, long-term returns even in difficult market conditions”.
A spokesman for NEST said the trust is waiting for managers’ submissions first before deciding on the value of the investment.
He confirmed the tender process includes three lots: UK-based infrastructure, global infrastructure and green/clean renewable energy. He added that one or multiple managers could be hired.
The notice stated that successful fund managers will need to demonstrate they can offer high quality and evergreen investment processes, a robust risk management framework and consideration of environmental, social and governance factors.
O’Neill warned that before applying, fund managers need to carefully consider their fees and investment structures. “We need approaches that are repeatable, affordable and scalable to match NEST’s rapidly growing AUM.”
NEST receives more than £400m a month in member contributions. Forecasts put the trust as having £20bn AUM by 2022, and by the late 2020s one third of the UK working population is expected to have a NEST pension pot.
This new mandate will be added to the existing range of ‘building blocks’ funds that make up the scheme’s default strategy – the Retirement Date Funds – and some of its alternative fund choices.
Applications for the tender can be made through the Bravo platform and must be submitted before 17 February. The spokesman said that manager appointments will likely happen by the end of the year.
The procurement follows NEST’s recent appointment of private credit mandates, announced last autumn, and is another step in enhancing the trust’s investment strategy.