The most popular private equity fund among the UK local authorities is Pantheon USA Fund VII, which runs almost £142 million (€186 million) on behalf of five LGPS, Modern Investor's White Paper has revealed.
The £2.25 billion (€3 billion) private equity fund started investing in 2006 in North America and is among the family of 10 US-focused private equity funds managed by the company. Overall, Pantheon has almost €28 billion invested worldwide on behalf of institutional clients.
While the asset class is gaining popularity among institutional investors, some CIOs are still not fully convinced by it. Back in September, our LGPS insider said he was 'not a big fan of private equity', mentioning the lack of knowledge and expertise in the sector by the trustees. On another hand, Citywire’s research indicate that private equity allocations by LGPS schemes could be on the increase.
According to the Modern Investor research, the top 10 most-followed private equity funds by UK LGPS belong to four key players: number one is Pantheon, which manages four funds (USA Fund VII, Europe Fund VI, USA Fund VIII, USA Fund VI), followed by Partners Group, which runs three funds (Global Real Estate, Multi Asset Credit, Direct Real Estate).
Further down the list, Capital Dynamics is in third place with two funds (Merseyside Private Equity and Private Equity), while JP Morgan counts on its JPMorgan IIF UK fund.
Our research also showed that the majority of these holdings are funds of funds (including all the Pantheon ones) rather than single manager funds.
Our data, which have analysed the portfolios of 95 UK local authorities, of which 64 disclosed their private equity holdings over the 2014/2015 financial year, also show that the £15 billion (€20 billion) Strathclyde Pension Fund has £1.4 billion (€1.8 billion) invested in private equity. This makes it the second largest UK local pension scheme investing in the asset class after Wolverhampton.
The Strathclyde pension fund has been invested in six of the 10 most popular private equity funds among LGPS investors, including three in which it is the only LGPS invested.