Future Growth Capital (FGC), the newly launched private markets investment manager formed by Schroders plc and Phoenix Group, has received regulatory approval for the first UK dedicated multi-asset Long-Term Asset Fund (LTAF) aligned with the Mansion House Compact.
LTAFs, authorised by the UK’s Financial Conduct Authority, are designed to help investors with long-term horizons access illiquid assets. FGC, backed by Schroders’ £97.3 billion private market platform and Phoenix Group’s large customer base, aims to make the UK a key hub for private market investment. It plans to deploy £1 billion initially, with a goal of mobilising £10-20 billion into UK and global private markets over the next decade. Phoenix Group, aligned with the Mansion House Compact, will invest 5% of its savings products for policyholders. FGC will leverage Schroders Capital’s LTAF platform, building on its success, including launching the UK’s first LTAF in April 2023.
This approval, alongside a second global LTAF, represents a significant step in expanding investment opportunities in unlisted assets for pension savers.
The two newly approved funds, the Schroders Future Growth Capital UK Private Assets LTAF and the Schroders Future Growth Capital Global Private Assets LTAF, aim to diversify portfolios and potentially enhance returns through exposure to private markets.
The UK Private Assets LTAF is dedicated exclusively to the UK market. Its focus is on investing across a broad range of UK private market assets, supporting the growth of innovative businesses while seeking to generate higher returns. Meanwhile, the Global Private Assets LTAF offers a diversified approach to international private markets, providing investors with exposure to a wide array of opportunities across geographies.
ELTIFs and LTAFs: Is the hype warranted?
Paul Forshaw, chief executive, Future Growth Capital, said: “This is a significant step forward for our new business and for UK pension capital. The Schroders Future Growth Capital UK Private Assets LTAF will be the first LTAF entirely aligned with the Mansion House Compact, connecting long-term savings directly to the most attractive private UK companies, supporting these exciting businesses to grow and stay in the UK.
The Schroders Future Growth Capital Global Private Assets LTAF will provide long-term savers with the benefits of further diversification across the spectrum of international private assets. Importantly, both LTAFs have the potential to deliver better long-term retirement performance.”
Ashish Patel, managing director in Houlihan Lokey’s Capital Markets Group, highlighted the importance of the development, stating: “This is a significant step forward, allowing UK pension funds to provide savers with better access to high-quality private businesses while unlocking vital capital to finance UK scale-ups.” He noted that overseas pension funds, like Ontario Teachers’ Pension Plan and Canada Pension Plan Investment Board, have successfully supported UK tech firms, benefiting their investors, and expressed hope that UK pension savers will experience similar advantages.
Patel acknowledged that while the Mansion House Compact has been positively received in the venture capital ecosystem, its true impact will depend on the level of investment in growth-stage scale-ups, where Europe still lags behind the US, compared to early-stage startups, which are already supported by schemes like SEIS, EIS, and VCTs.
