Scottish Widows, a life insurance, pensions and investment company in the UK, will launch an open-architecture long term asset fund (LTAF) later this year to expand access to private markets for its pension customers.
The LTAF provides a UK-authorised fund structure that enables investment in illiquid assets while offering structural safeguards appropriate to the underlying assets.
The offering will be operated by a full scope alternative investment fund Manager, Carne Group. Pending regulatory approval, the fund aims to simplify governance and valuation across private market assets. This structure allows Scottish Widows to provide a more consistent and scalable investment platform, avoiding the complexity of using multiple sub-funds managed by different providers.
The fund will provide exposure to a range of private market offerings spanning private equity, credit, infrastructure and social housing by leveraging implementation routes such as co-investments, direct sourcing and secondary markets. The offering will include distinct growth and credit LTAFs to align with different stages of members’ retirement journeys.
Aberdeen Investments and BNP Paribas Asset Management have been appointed to manage the growth and credit strategies respectively. Aberdeen will tap into its global network of over 400 general partners to source private equity, infrastructure, and UK venture capital opportunities while BNP Paribas will focus on diversified private credit assets through its origination network.
Chira Barua, CEO of Scottish Widows, said: “Private assets can be an attractive component of a modern portfolio structure for helping our customers achieve good outcomes in retirement. It’s also a brilliant win-win as it supports economic growth by providing funding to companies with bespoke financing requirements. As one of the UK’s largest workplace pension providers and part of a group whose core purpose is helping Britain prosper, this is an important building block in our endeavour to offer the most distinctive pension proposition in the UK.”
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Kevin Doran, chief investment officer of Scottish Widows, commented: “Our open-architecture implementation approach gives us full control and future-proofing on how and where we invest within our LTAF. The opportunity to source unique investment opportunities from across the Lloyds Banking Group estate only adds to the offering, meaning our policyholders will be able to see their investments at work within their local communities. With full control of our own sponsored vehicle, we have the visibility of cash flows from members’ contributions, right through to asset flows. This limits the need for precautionary liquidity, making sure our members get the full benefit of their investments in private assets.”
Jeremy Soutter, MD, Carne Group, said: “This is a huge step change in how a broader investor base can potentially access private markets. Carne is proud to support this shift towards the democratisation of private markets and working with leading providers like Scottish Widows in bringing these innovative products to market.”
Xavier Meyer, CEO, Aberdeen Investments, added: “Scottish Widows’ LTAF is a meaningful step towards the democratisation of private assets. We are proud of being part of this initiative, and grateful of the trust that Scottish Widows has placed into our long-standing private market expertise.”
Sandro Pierri, CEO of BNP Paribas Asset Management, commented: “We are delighted to be selected by Scottish Widows to design and structure a bespoke solution that aims to offer members diversification, lower volatility and enhanced returns via integrating several in-house private credit asset classes with embedded ESG benefits.”
