Chart of the Week: UK LPs Segmentation

 Public pension funds are the largest group of institutional investors within the UK private equity community.   

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Private Equity International’s Research & Analytics team profiles 289 UK LPs that invest or have invested into private equity, of which public pension funds are the largest group.

 

In April last year, the UK approved ‘The Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 2013’. Through this amendment, the maximum that local pension funds can allocate to limited partnerships had doubled from 15 percent to 30 percent of total investments. Many of these pension funds are increasing or looking to increase allocations to private partnerships in response to this. 


 

The London Borough of Harrow Pension Fund increased its target allocation to private equity last year from 3 percent to 5 percent. The Brent Pension Fund also confirmed that it will increase the amount it allocates to private equity partnerships in the future.  


 

However, 12 of the pension funds that we profile will not be taking advantage of this amendment because of over-allocation to the asset class. One of these, West Midlands Pension Fund, is currently over allocated by 2.56 percent.  

 

Banks and Financial services firms are no longer influential within the UK private equity scene, with only half of those profiled having appetite for private equity fund investments. Bank of Scotland for example, invested in a large portfolio of funds, but it has switched the focus of its operations towards traditional retail and corporate banking.g. In June 2010, it transferred £480 million worth of private equity assets to Cavendish Square Partners, a joint venture established by Coller Capital.