Border to Coast secures GBP1bn in PE investment commitments

Border to Coast Pensions Partnership (“Border to Coast”), has secured GBP1 billion 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 cGBP46 billion. 

Border to Coast has completed GBP500 million of private equity investments from its first offering (Series 1A) in line with expected timescales. The portfolio consists of nine investments with high quality managers providing exposure to Border to Coast’s targeted themes within Private Equity.

Border to Coast has also secured a further GBP485 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, says: “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.

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 nine investments for Series 1A are:

GreatPoint Innovation Fund II – USD40 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 – GBP40 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 – USD60 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 – USD100 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 – USD60 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 – USD75 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 – USD90 million, and Hg Genesis Fund IX – EUR35 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 – USD70 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 – USD50 million

Digital Alpha is an experienced manager that 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”.