Nest has appointed HarbourVest Partners to help the pension scheme invest in private equity.
The new private equity mandate will help Nest invest at least £1.5bn in this asset class by early 2025 as well as the longer-term goal to have about 5 per cent of its portfolio in private equity.
A custom fund-of-one created to meet Nest’s goals and objectives will be used by HarbourVest Partners’ fund to participate in co-investment opportunities on Nest’s behalf. Along with the other co-investment accounts of HarbourVest Partners, this fund will be given a pro-rata allocation of suitable co-investment opportunities.
The procurement procedure that Nest started in 2021 resulted in the awarding of this second private equity mandate.
The mandate of HarbourVest Partner will concentrate on deals in the growth and middle market sectors. It says it anticipates beginning the capital deployment into new projects in the upcoming months.
Private equity completes Nest’s primary allocation to assets in the private market, which also includes infrastructure, private credit, and real estate. Nevertheless, Nest says it might take into account further private market tactics in the future.
Nest head of private markets Stephen O’Neill says: “During the procurement process HarbourVest Partners impressed with their ability to unlock private equity deals around the world. They have an impressive scale to help provide a reliable and regular deal flow, allowing them to be highly selective in the deals they choose.
“They are also keen to exercise their governance rights to help manage long-term risks and encourage sustainable business activities. They understand the importance of responsible investing and represent an excellent partner for Nest to work with.
“With two managers now in place, we’re ready to integrate this important asset class into our investment strategy, allowing our members to benefit from the superior returns private equity typically achieves relative to other types of investments.”
HarbourVest managing director Craig MacDonald says: “We are delighted to be partnering with Nest on this new chapter in its evolution as it opens up private equity to its pension savers. We worked hand-in-hand with the Nest team to develop a flexible and tailored solution that aligns with Nest’s needs and ambitions for its members. Together, we believe we are filling a much-needed gap in the market, providing access to the asset class for a broader base of UK pension savers.”
