Stay informed with free updates
Simply sign up to the Financial services myFT Digest — delivered directly to your inbox.
Phoenix Group, the UK’s largest savings and retirement business, has teamed up with FTSE 100 asset manager Schroders to launch a venture to channel more pension money into fast-growing private companies.
The firms said on Wednesday that they had established Future Growth Capital to promote the aims of the Mansion House Compact, a series of reforms from former conservative chancellor Jeremy Hunt, including encouraging pension funds to allocate more money to private businesses.
Phoenix is making an initial commitment of £1bn to the new investment manager, with a target of deploying up to £2.5bn over three years. FGC will back companies in the UK and globally and is aiming to invest between £10bn and £20bn in private markets over the next decade.
The Mansion House Compact was the highest-profile attempt to reboot Britain’s capital markets, an ambition that has won the backing of business leaders, investors and the new Labour government.
Its aims include overhauling a risk-averse pension system, reversing a multiyear decline in London listings, and finding ways for start-ups to secure domestic funding to scale up in the UK.
Labour chancellor Rachel Reeves welcomed the companies’ decision to establish the joint venture, saying “we want pension fund money to work harder for people and the economy”.
The government’s own review of the pensions system will “explore how we can unlock even more investment in the UK economy while boosting pension pots”, she added.
Schroders has £750bn in assets, including £74bn run by its dedicated private markets business, Schroders Capital.
“The UK’s private companies are an untapped universe of investment opportunity,” said Peter Harrison, Schroders’ chief executive.
Phoenix was one of nine of the UK’s largest pension providers to sign up to the Mansion House reforms, committing to allocate 5 per cent of their so-called default funds for defined contribution pension plans to unlisted equities by 2030.