Aviva has launched a dedicated venture capital arm today as it rows in behind the government’s drive to pump more pension cash into start-ups.
The move by the FTSE 100 pension giant forms part of a wider project to restructure its private market arm, which previously focused solely on real assets.
In a statement, Aviva said it had been pushed towards the decision by both the Mansion House Compact last year and what the company said was increasing demand from pension funds, which have historically not been able to access private markets investments.
The Mansion House Compact, drawn up by the government and City of London Corporation last summer, committed 11 of the UK’s top pension firms to investing five per cent of their assets into unlisted assets by 2030.
Chancellor Rachel Reeves has called for a major review of the pension sector in a push to funnel the expected £800bn in assets in defined contribution (DC) benefit schemes towards high growth start-ups and crucial pieces of infrastructure.
“Driven by the UK’s supportive policy environment, which is epitomised by the Mansion House Compact, the scale of the potential investment opportunity is significant,” Mark Versey, CEO of Aviva Investors.
“Private markets assets today are severely underrepresented in the portfolios of UK DC pension funds relative to global peers,” he added.
Reeves has been looking to push the British pension system towards a Canadian model, consolidating local government pension schemes to allow them to better invest their resources in private assets.
While Shadow Chancellor, she said she may force pension funds to divert some of their assets into startups to help boost the British economy.
Aviva’s private markets arm currently manages over £40bn in assets, mainly focusing on equity and debt strategies in real estate and infrastructure.
Five employees at Aviva will move over to the department, with the team having already managed venture capital projects on behalf of Aviva’s balance sheet for over 10 years, controlling more than £450m. The team will be led by Ben Luckett, managing director of VC and strategic capital.
The move today follows a similar push from rivals Legal & General and Phoenix earlier this year, both of which launched dedicated private market platforms.
Aviva said today it has also launched two long-term asset funds (LTAFs), the £1.6bn Real Estate Active LTAF, which was the largest LTAF brought to market at time of launch, and its Climate Transition LTAF.