NEST and Sterling 20: A Strategic Investment Initiative for UK Growth

The Sterling 20 is a newly formed partnership involving 20 of the UK's largest pension providers and insurers, aimed at channeling billions into regional growth and infrastructure projects. This initiative was officially launched at the Regional Investment Summit in Birmingham on October 21, 2023. It builds upon the earlier Mansion House Accord, which saw 17 pension providers commit to investing at least 5% of their default funds in UK private markets. The Sterling 20 aims to mobilize significant capital for housing, infrastructure, and high-growth sectors such as artificial intelligence and fintech.

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NEST, the UK’s largest defined contribution master trust managing over £55 billion in assets, has committed £500 million to Schroders Capital as part of its strategy to increase its private market allocation from approximately 18% to 30% by 2030. This latest investment brings NEST's total commitment to Schroders Capital’s private equity strategy to £1.5 billion. NEST's investments will focus on both established and emerging businesses in sectors like healthcare, technology, and pharmaceuticals across North America, Asia, and Europe.

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NEST's recent investments include £40 million aimed at expanding gigabit-capable broadband in rural areas of Scotland and Northern England, and £45 million directed towards an energy-from-waste project in the Midlands. The master trust plans to invest approximately £5 billion through its partnerships with Schroders Capital and IFM Investors by 2030, with a goal of reaching £12 billion in UK private markets.

NEST kicks off £5bn private markets drive with £85m UK infrastructure deals

Chancellor Rachel Reeves emphasized the importance of the Sterling 20 initiative, stating, “This is about getting Britain building again – bringing our savings, our investors, and our regions together to deliver the homes, infrastructure, and industries that will drive growth and create good jobs in every corner of the country.” Ian Cornelius, CEO of NEST, noted, “Every decision we make puts our members and their long-term outcomes first. We believe private assets can play a key role in delivering strong, consistent returns for them.”

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While the Sterling 20 initiative has been largely welcomed, some industry experts have expressed caution. Stephen Budge from LCP highlighted the need for a balanced approach, warning against a focus solely on UK-centric investments that may overlook global growth opportunities. He stated, “We need to be careful that UK pensions don’t just aim to fix UK Plc problems; the focus must be on driving opportunities for global growth.”

UK’s Biggest pension funds and insurers unite to power UK growth and infrastructure investment - IFA Magazine

The Sterling 20 initiative is expected to unlock over £25 billion for new housing, infrastructure, and innovation projects by 2030. As the partnership develops, it will work closely with the Office for Investment to create a robust pipeline of investment opportunities that align with the UK’s economic growth objectives.

Britain’s biggest pension funds back regional growth drive

• “Rachel Farrell, director of public and private markets at NEST Invest, said: “Private equity deals offer exciting investment opportunities for our members.” — Rachel Farrell, Director of Public and Private Markets at NEST Invest

NEST ramps up private markets push with £500m private equity investment

• “Sterling 20 shows what can be achieved when we all pull in the same direction,” — Rachel Reeves, Chancellor of the Exchequer

UK pension heavyweights Legal and General and Nest back £25bn Sterling 20 push for private equity and infrastructure – Private Equity Insights

• “A strong pipeline of opportunities will be essential to realising this growth for the benefit of our members and the UK economy.” — Ian Cornelius, CEO of NEST

UK’s largest pension funds back regional investment drive through ‘Sterling 20’

The Sterling 20 initiative represents a significant step towards leveraging pension funds for regional development, with NEST playing a pivotal role in this strategic investment landscape.

Britain’s biggest pension funds back regional growth drive