Nest, the UK’s largest master trust, is set to allocate an initial £200m to a venture capital strategy overseen by Schroders Capital, with the aim of growing this to £1bn by 2030. The trust has £68bn in assets under management and is seeking to formalise its existing allocations to growth equity and increase exposure to “late-stage, high-growth businesses”.
Mark Fawcett, chief executive of Nest Invest, said the move would provide injections of cash that growing businesses need to scale. He added that Nest is well positioned to support ambitious private companies, given its long-term investment approach.
Nest’s venture capital strategy will focus on late-stage, high-growth businesses, with an emphasis on UK-based companies. The trust cited feedback from its members, who are keen to see their pension fund investing in growing UK startups to tap into investment returns and help create jobs.
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Fawcett said Nest would seek to build a more meaningful allocation to late-stage venture capital over the next few years. Hitting the £1bn mark would be subject to the availability of assets, reflecting the trust’s expected growth rate as pension pots get bigger.
Pension funds have been under pressure to increase domestic allocations, including in private markets. This led to the Mansion House Accord, launched last year and signed by 17 pension providers, including Nest.
Tim Creed, head of private equity investments at Schroders Capital, said the UK is already Europe’s largest venture hub and the world’s third largest. He added that domestic capital has not historically participated at the same rate, but increasing pension fund and institutional participation in the UK venture market could unlock compelling opportunities for millions of UK savers.
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Nest’s venture capital “sleeve” includes stakes in companies such as Wayve, an autonomous driving technology firm, and Synthesia, a specialist in AI video creation. These companies are also in Schroders’ UK Innovation long-term asset fund, which has gained investment from other master trusts and funds within the Local Government Pension Scheme.
Michael Moore, chief executive of trade body UK Private Capital, said the investment is a significant and welcome milestone for the UK venture capital market. He added that it demonstrates growing confidence that backing innovative, high-growth businesses can deliver attractive long-term returns for pension savers while supporting the UK’s future economic growth.
Nest expects its wider private markets allocation to reach 30% of its overall investment portfolio by 2030.
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