PE savvy UK pensions increase allocations

According to the National Association of Pension Funds, UK pension plans that are already actively investing in private equity significantly stepped up their commitments in 2001.

UK pension plans that are actively investing in private equity have put more money into the asset class in 2002 than they did in 2001, according to a survey released by the National Association of Pension Funds (NAPF).

While the number of UK pension funds investing in private equity remained more or less stable at 99, 33 per cent of those have now at least £20m invested in private equity funds. In 2001, only 6 per cent had £20m or more invested in the asset class, the NAPF said.

Thirteen plans, or 16 per cent, had at least £100m invested in private equity funds this year, compared with just one in 2001.

Stephan Breban, a senior investment consultant and private equity specialist at Watson Wyatt, who advises UK pension plan trustees on their investment strategy, confirmed that this year his clients had shown greater interest in the asset class than they had done previously.

According to the NAPF, the recent increase in individual pensions’ appetite for private equity has largely been due to the ongoing migration of institutional assets away from public equity markets and into alternative investment classes.

The NAPF findings will be considered good news by the UK Government, which in March 2001 asked Paul Myners, former chairman of Gartmore Investment Management, to look into institutional investment in the UK. Part of the initiative’s objective was to boost institutional investment in unquoted companies via private equity and venture capital partnerships. 

The National Association of Pension Funds’ 1,000 members control more than £700bn of assets. The proportion of these assets invested in private equity remains significantly below 5 per cent.

Some 500 of the NAPF’s members participated in the survey.