"Two City Firms Collaborate to Invest £20bn in UK Businesses"

02 Aug, 2024

"Two City Firms Collaborate to Invest £20bn in UK Businesses"

Two of the largest City firms, Phoenix Group and Schroders, have formed a joint venture to invest up to £20bn of pension funds in fast-growing UK businesses, including green energy. This initiative follows government reforms aimed at increasing returns for savers and boosting the British economy. The investment vehicle, Future Growth Capital, plans to deploy between £10bn-20bn into private markets over the next decade, focusing on high-growth companies not listed on the stock market.

This venture builds on the "Mansion House compact," an agreement led by former chancellor Jeremy Hunt to encourage pension fund managers to invest in unlisted assets, which can offer higher returns despite being riskier. The goal is to secure better returns for retirees and support smaller UK companies to drive economic growth. Investments will target sectors such as green energy, windfarms, solar, property, and small businesses.

The initiative has received support from Labour, with chancellor Rachel Reeves welcoming the announcement. Future Growth Capital will start with an initial £1bn from Phoenix Group, managed in partnership with Schroders, with plans for Phoenix to allocate up to £2.5bn over three years. Phoenix Group aims to invest 5% of its savings products, about £50bn, into private assets for potentially better returns than traditional equity investments.