UK's Nest to invest $860m in private companies

The UK's largest pension scheme by members has selected a manager to oversee a significant new open-ended mandate.

Crescent Capital Group will manage a direct lending mandate for Nest to the tune of $858.5 million (£450m). The money is to be deployed over the coming years and invested in secured, first-priority loans to US middle market private companies.

There is to be a focus on non-cyclical businesses across sectors like healthcare, technology, consumer and industrial, Nest said. It will also show a preference for companies that generate strong, recurring revenues and high free cash flows.

Nest said the mandate is part of its strategy to invest 30% of its assets in private markets by 2030.

"Our priority is always to deliver positive, long-term outcomes for our members. This investment helps build a more diverse and resilient investment strategy that can support their savings through different market conditions," Nest Invest director of public and private markets Rachel Farrell said.

"As we broaden our exposure to global credit markets, it is essential that we do so through managers with strong business models, well-resourced teams and differentiated investment expertise.

"We are therefore pleased to appoint Crescent, whose extensive sourcing capabilities, disciplined underwriting, focus on credit quality and strong track record across market cycles make them a trusted partner as we continue to build and diversify our portfolio."

Meantime, Crescent Capital said it is delighted to have been picked by Nest for the mandate.

"This partnership reflects Nest's confidence in our longstanding track record, disciplined approach to credit, and ability to source compelling privately originated opportunities across market cycles," Christopher Wright, president of Crescent Capital, said.

"We are committed to being responsible stewards of capital on behalf of Nest's more than 13 million members and over half a million employers and aim to deliver the stable income, downside protection, and attractive risk-adjusted returns that private credit can offer.

"We look forward to building a partnership that supports Nest's mission for many years to come."