Standard Life Investments is launching an Individual Savings Account (ISA) to be invested in its listed fund-of-funds vehicle, Standard Life European Private Equity Trust. ISAs are a tax-free savings vehicle available in the U.K. Individuals will be able to invest up to GBP7,000 in the private equity ISA. Aimed at sophisticated retail investors and independent financial advisers, the ISA is designed to generate retail interest in and demand for private equity products.
Alan Burton, managing director of Standard Life Investments (Mutual Funds), said, “IFAs have been asking for additional products and services to put in their tool-box’ for their higher net worth clients and private equity products meet that need.” The nature of private equity funds means there will be little or no dividend but the ISA protects capital growth on the investment from capital gains tax.
The investment trust was listed on the London Stock Exchange in May last year and was partially created from private equity fund investments already on Standard Life’s balance sheet. It is now about 50% invested, in 26 funds. The trust is managed by Standard Life Investments’ private equity team, which is headed by Jonny Maxwell. He says, “Private equity investment has previously been the domain of corporate or larger private investors. By offering an ISA to retail investors in the investment trust, we can provide a cost-effective and tax-efficient way of accessing one of the fastest growing asset classes in Europe.”
Standard Life’s new product will give individuals access to European private equity funds, including those managed by Apax, Candover, CVC, Charterhouse and Phildrew, which generally exclude small-scale investors. The ISA has advantages over vehicles like Venture Capital Trusts, which offer tax-breaks on private equity investment by individuals in the U.K., as the fund-of-funds structure means it has a much wider mix of assets. Funds in which the trust is invested are diversified by country, investment stage and industry sector.