Phoenix Group and Schroders have announced plans to launch a new private markets investment manager with a £1bn initial commitment, increasing to £2.5bn over three years.

The investment manager, Future Growth Capital (FGC), will design and manage UK and global multi-private asset solutions for UK insurance and pension clients to open access to a broader range of innovative companies and investment opportunities for millions of UK pension clients.

Initially, it will leverage Schroders’ pioneering Long-Term Asset Fund (LTAF) investment platform, providing investment advice to the fourth and fifth LTAFs planned for launch by Schroders’ dedicated private markets business, Schroders Capital, in the UK.

FGC is also expected to help support the objectives of the UK’s Mansion House Compact, helping to 'unlock' investment opportunities in private markets for millions of new pension savers to benefit from the diversification and investment return opportunities that unlisted assets can offer.

As part of this, FGC aims to deploy an initial £1bn and £10-20bn over the next 10 years into UK and global private markets.

Schroders group CEO, Peter Harrison, said: “The UK’s private companies are an untapped universe of investment opportunity. By stimulating investment into our private markets, our partnership will address the multiple challenges of the looming retirement crisis and boosting UK growth.

“By connecting long-term savers with our country’s most inventive companies, Future Growth Capital will help more people to fund a secure and comfortable retirement, whilst supporting businesses to grow and thrive right here in the UK.

"In doing so, we’ll be making the UK an even more attractive place to live, work, retire and invest.”

Adding to this, Phoenix Group group chief executive officer, Andy Briggs, said: “For too long, pension savers in the UK have received lower returns than their counterparts in the P7
such as Australia and Canada, partly because the UK allocates much less capital to private market assets than other developed countries.

"By forming FGC with Schroders, it will help us to deliver our goal of giving UK long-term savers a way to invest in a more diversified portfolio with the potential for higher returns, from a broader range of assets.

"This facility will also play a significant role in the future design of our flagship defaults. FGC will be a long-term, patient capital investment manager, constructed to ensure that customer protection remains at its core by taking a blended approach to asset allocation.”

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