The FT is reporting that the Private Equity markets are distinctly unimpressed by the opportunity to invest a portion of our workplace pension in its funds with scant regard to the charge cap which currently protects savers from egregious charges
..several private equity executives who stand to benefit from the scheme said its value to the wider economy could be limited.
“There is a lot of capital out there already,” said the head of one investment group’s European infrastructure business. “When you look at renewables, everyone wants a share, so there’s no shortage of demand for those assets,” he added, suggesting that the impact on the UK economy of channelling cash from workplace pension funds into private markets could be “marginal”.
Globally, the private equity industry has amassed as much as $3tn in funds that it has not yet invested.
To which any reasonable person might ask, just what is the point of that $3tn cash mountain? Why is the UK Government pension funds invest our savings when it has the capacity to access this capital itself. Is that money currently attracting the kind of fees that workplace pensions find unacceptable and what value are investors getting paying fees to have money sat in cash?
I am going to be speaking at a Private Markets Summit on Monday (somewhere in a field in Hampshire) and have the opportunity to hobnob with some of these private market people. I intend to ask these questions of them as I have no idea whether they are bothered about access to my money or not.
I’m not dropping my knickers for any old guy…
Reading the brochure, I note that after my “fireside chat” with the audience I will be treated to a cocktail reception , gala dinner followed by a whisky tasting. All of this is no doubt necessary for
COOs and CFOs across the Private Equity, Private Credit, and Real Estate funds sectors to come together to address challenges, gain insights and share best operational practices.
However, it represents a rather different world to the one that most of Britain’s 10m workplace pension savers are used to. However, I am very pleased to see that the following day, my good friends Dr Christopher Sier and Andy Agethangelou are speaking separately on restoring the trust deficit between private markets and their customers.
If I was the COO or CFO of any of the attendees or sponsors, I would hardly feel too bothered. If there really is £3,000,000,000,000 sitting around in uninvested funds earning these guys good money then the likes of me and Andy and Chris just add a little piquancy to the occasion.
On the other hand, it may be that these cocktail shaking, whisky swilling debauchees are creatures of my imagination and they may have a serious social agenda which includes
- Saving the planet from imminent self destruction
- Ensuring that Britain’s housing stock is rebuilt so that ordinary people have access to affordable housing
- Providing access for small business to micro-finance
- Providing venture capital to entrepreneurs wanting to progress British industry
But I will get into bed with a genuine gent…
I know people in private equity who are not spoilt brats and are bothered. I know Edi Truell who is investing money in real projects which do real good. He should be allowed to open his Pension Superfund and use it for the purposes his private equity vehicle Disruptive Capital is promising.
Like the Atlantic SuperConnection which is developing a c1,500km subsea High Voltage Direct Current (HVDC) cable to bring 1GW of baseload and on-demand geothermal and hydro-electrical power from Iceland to the UK.
Or the Tungsten Foundation which provides total invoice automation or Brooklyn Immuno Therapeutics which is s a clinical-stage bioresearch company developing IRX-2, an important new immunotherapy candidate for cancer.
The answer lies in people and intent
I expect to find in Hampshire a mix of genuinely bothered financiers and the usual charlatans who are more interested in lining their pockets than outcomes for their investors.
I have been around the block and so has Chris and Andy. Going down to see these people will help me judge how much workplace pensions needs the private markets and how much interest these guys have in our money.
I suspect that we already have our financiers in place. We have our Edmund Truells and we have our Darren Agombers. We have Nico Aspinall walking away from a £15bn workplace pension to be CIO at Connected Asset Management – a fledgling supplier of access to the areas of private markets that maximise social impact for workplace pensions. We have established managers such as Impax, which involves pension veteran Sally Bridgeland.
The answer to where we go for our money lies in people and intent, not in dropping our knickers for the whisky swillers.