BORDER TO COAST IN £1BN OF PRIVATE EQUITY INVESTMENTS

Border to Coast Pensions Partnership (“Border to Coast”), has secured £1bn of commitments to Private Equity investments as it continues to develop new investment opportunities for its eleven local government pension schemes, which collectively have assets of c.£46bn.

Border to Coast has completed £500m of private equity investments from its first offering (Series 1A) in line with expected timescales. The portfolio consists of ten investments with nine high quality managers providing exposure to Border to Coast’s targeted themes within Private Equity.

Border to Coast has also secured a further £485 million of commitments from eight Partner Funds to its second Private Equity offering (series 1B). These commitments are to be invested in the period to 31 March 2021 as part of a programme to provide a diversified global private equity portfolio over a three-year period.

Border to Coast Chief Investment Officer, Daniel Booth said:

“Private Equity is an important asset class for our Partner Funds, helping them to build a diversified portfolio, while delivering a return that isn’t directly correlated to equity market returns.  Due to our collective size we have been able to access high quality investments that will allow our Partner Funds deliver their strategic asset allocation strategies.”

The Border to Coast Private Markets structure was originally launched in May 2019 to capture the benefits of pooling private market investments for its LGPS Partner Funds. These include economies of scale, increased resources for due diligence, reduced costs and access to a wider range of investments including co-investments.  The aim is to enhance risk-adjusted, net of fees returns from Private Market investments over the long term.

Private equity investments

Partner Funds can choose on an annual basis the level of their investment in private market asset classes. Eight of Border to Coast’s eleven Partner Funds made commitments in Series 1A (Cumbria, Durham, East Riding, Surrey, South Yorkshire, Teesside, Tyne and Wear and Warwickshire).

Investments are selected using a robust investment process focusing on investment and operational due diligence. This process is undertaken by the Border to Coast team supported by third party service providers.  Responsible investment is incorporated into the investment process both in terms of identifying investment opportunities as well as assessing a manager’s approach to incorporating these principles into their operations and the operations of the companies or assets in which they invest.

The investments for Series 1A are:

  • GreatPoint Innovation Fund II – $40 million

GreatPoint is a US-based venture capital manager focused on early stage venture investments. These are principally in revenue generating companies that are disrupting existing industries with a principal focus on enterprise software, food and nutrition, digital health and life sciences.

  • Palatine Private Equity Fund IV – £40 million

Palatine is a regional private equity firm which is focused on the lower mid-market in the UK. Palatine has a focused approach towards value creation, seeking investment opportunities with the potential for buy and build expansion and/or significant operational improvements.

  • Baring Asia Private Equity Fund VII – $60 million

Baring is an established manager with a strong long-term track record in Asia. Baring is focused on operational improvement as a key driver of performance.

  • Neuberger Berman Co-Investment Fund IV – $100 million

Neuberger Berman is a large established global manager with a strong long-term track record across Private Markets. This fund focuses on global co-investment opportunities with a mid-market focus and a differentiated investment approach.

  • Greenspring Opportunities Fund VI – $60 million

Greenspring is a US-focused late stage venture capital and growth manager with an established and well-resourced team and a long successful track record. This fund focuses on co-investment opportunities and benefits from the wider Greenspring platform for sourcing and due diligence.

  • StepStone Secondaries Opportunities Fund IV – $75 million

StepStone is an established global manager with an experienced management team and a strong origination and sourcing capability. This fund invests in secondary transactions on a global basis with a mid-market focus.

  • Hg Saturn Fund II – $90 million and Hg Genesis Fund IX – €35 million

Hg is a European software-focused manager with an experienced management team and a long successful track record demonstrating operational value add capabilities. Saturn focuses on upper mid-market investments and Genesis focuses on mid-market investments.

  • Blackstone Life Sciences Fund V – $70 million

Blackstone is a large well-established global manager with a strong long-term track record across Private Markets. This fund focuses on risk sharing with pharmaceutical and biotech companies on product development programmes.

  • Digital Alpha Fund II – $50 million

Digital Alpha has developed exclusive sourcing relationships with strategic industry partners. This fund is focused on digital infrastructure and the expected long term growth in global demand in areas such as next generation networks, cloud computing, and the “Internet of Things”.