Private equity investor Hermes GPE has sedured a GBP1 billion mandate from the BT Pension Scheme (BTPS) bringing the firm’s total private equity AUM to GBP4 billion (USD6 billion).
Hermes GPE is part of Hermes Investment Management (Hermes), the GBP30.1 billion manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, and was set up as a joint venture between the Hermes GPE management team and Hermes.
The GBP1 billion allocation will be invested over three years, split evenly between funds and co-investments, and invested on a global basis by Hermes GPE's 16-strong investment team based in London, New York and Singapore.
The Hermes GPE model optimises private equity exposure for institutional investors by combining globally sourced co-investments with commitments to primary funds. Hermes GPE was an early adopter of the co-investment approach and has subsequently built a 15 year USD1.8bn co-invest track record with realised returns of 1.8x and 31.3 per cent IRR. Hermes GPE recently raised one of the largest co-investment funds of 2014, Hermes GPE PEC II LP, which closed at USD480 million in September 2014. The Fund is already circa 82 per cent committed to 28 transactions with a further three pending completion and expects to be fully committed by the end of 2015.
Peter Gale (pictured), Head of Private Equity and CIO of Hermes GPE, says: "We are delighted that BTPS continue to put their trust in us and our investment model. As one of the first private equity specialists to move away from the funds-only model, we have long been an innovator in the space and have a proven track record to match. Through our flexible implementation model, we believe private equity can be complementary to traditional asset classes and we will continue to work closely with BTPS, applying our investment judgement to meet their risk return targets."
Simon Moss, Partner, Hermes GPE, says: "Following the implementation of the first cycle of our combined funds and co-investment program for BTPS, we now look forward to investing the next program and to continuing to demonstrate the potential our co-investment model has to enhance investment returns via faster, targeted deployment of capital and more control over strategy and portfolio construction. The mandate will allow us to further enhance our relationships in the market as we put the funds to work, and demonstrate our proven execution capability to our global deal sourcing network."
