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Coast of Birdlington, East Yorkshire

Border to Coast Pensions Partnership (“Border to Coast”), one of the largest public sector pension pools in the UK with total assets of c.£46bn, has committed over £370m in five new Private Equity funds as it continues to provide new investment opportunities for its 11 local government pensions scheme partners.

Since its launch, Border to Coast has received £3bn of Private Market commitments from its Partner Funds.  The five new investments form part of its second Private Equity offering (series 1B), which received £485m of commitments from eight Partner Funds in April 2020 – 75% of which is now committed.

Mark Lyon, Head of Internal Management at Border to Coast said: “Private equity is an important asset class for our Partner Funds, providing a differentiated risk and return profile relative to public equity markets

“With our experienced in-house team, we have been able to generate meaningful fee savings for our Partner Funds while accessing high-quality investment opportunities with capacity constrained managers.  I’d like to thank the managers involved for their constructive approach throughout the investment process in what has been a challenging time.”

The five private equity funds are:

  • KKR Asian Fund IV ($94m) –   KKR is an established global manager with an experienced investment team in Asia. KKR Asian IV is an Asian-focused buyout fund targeting upper mid-market and large cap companies.
  • Thoma Bravo Fund XIV ($100m)  – Thoma Bravo is a sector specialist buyout manager focused on “consolidation” and “buy-and-build” strategies in the software sector, predominantly in the US. Thoma Bravo has a strong track record over the long term, with a focus on operational improvements.
  • Nordic Capital Fund X (€75 million) – Nordic Capital is an established European buyout manager targeting upper mid-market companies with sector specialisms in Healthcare, Technology and Financial Services. The manager is one of the pioneers of integrating ESG factors into the investment process.
  • AlpInvest Co-Investment Fund VIII ($125 million) – AlpInvest is a global private equity manager with a strong long-term track record. This fund is a global co-investment strategy focused on buyout and growth capital transactions and is managed by an experienced team who focus solely on co-investments.
  • Endless Fund V (£50 million) – Endless is a UK manager focused on turnaround or distressed companies in the lower mid-market. The manager has a strong long-term track record, extensive restructuring experience and a strong commitment to ESG.

These commitments provide exposure to a number of Border to Coast’s targeted themes within Private Equity including Operational Value Add, Buy and Build, Mid-market, Healthcare, Technology, Asia, Distressed and Co-Investments.

Investments are selected using a robust investment process focusing on investment and operational due diligence. This process is undertaken by the internal Border to Coast team supported by third party service providers. As part of the due diligence process, Border to Coast is developing longer-term relationships with key industry participants to enable Partner Funds to collectively benefit from their investments in Private Markets.

The remaining commitments in Series 1B are expected to be deployed by 31 March 2021.

Border to Coast’s Private Markets structure was originally launched in May 2019 to capture the benefits of pooling for its LGPS Partner Funds. These include economies of scale, increased resources for due diligence, 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.

Border to Coast has also appointed Cleveland & Co to provide advice in respect of the investments to be acquired by Border to Coast across the Private Markets platform covering private equity, infrastructure, and private credit.

Cleveland & Co will be reviewing all investment documentation throughout the life cycle of each investment, advising on legacy transfers and secondary sales, and generally providing support and guidance to the private markets investment team.

Cleveland & Co will also provide training to facilitate knowledge transfer to the legal and investment teams. The initial contract is for 3 years.

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