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UK pension funds up VC commitments

Private equity commitments by UK pension funds have increased by 11 per cent to GBP2.8 billion according to preliminary figures resulting from the National Association of Pension Funds (NAPF) annual survey of its members. David Gould, manager of investment services at NAPF, notes that since members were surveyed using size bands of commitments the GBP2.8 billion figure is an estimate, but he stresses, it is a very conservative estimate signaling that the final commitment may be somewhat higher once actual figures are released.

Despite the GBP2.8 billion figure and much noise from both sides of the industry UK VC’s looking for investor support on their home turf and pension funds protesting over issues as varied as trust law governance,

liquidity, transaction costs and incentives for trustees, asset managers and professional advisers in reality the increase in private equity commitment across the UK pension fund market has been negligible.

Overall it is thought that UK pension fund commitments to VC as an asset class remain, on average, around the 0.5 per cent mark.

Last year’s figures are to some extent boosted by the combined GBP2 billion commitment announced by four of the UK’s large pension schemes at the NAPF annual conference last year. Although how significant this boost will have been in 2000 remains to be seen since commitments are counted only once drawn down and this GBP2 billion figure will continue to filter into the VC industry over the next two or three years.