Key Takeaways
- • BNP Paribas Asset Management (BNPP AM) has been appointed by Nest, the UK defined contribution workplace pension scheme, to manage a diversified private credit portfolio.
- • BNPP AM will create an open-ended, evergreen diversified private credit fund initially holding infrastructure debt, commercial real estate debt, European mid-market loans, UK SME loans and US mid-market loans.
- • The fund is a joint effort between BNPP AM's Multi-Asset, Quantitative & Solutions (MAQS) and Private Debt & Real Assets (PDRA) divisions, with US mid-market loans originated through BNP Paribas Corporate & Institutional Banking's US Leveraged Finance Group.
- • The mandate is designed to give Nest's DC members access to private markets that BNPP AM says offer lower volatility and enhanced returns relative to public market equivalents.
- • Nest's CIO Mark Fawcett said BNPP AM stood out in a very competitive tender process on expertise, ESG commitment and innovation.
Summary
BNP Paribas Asset Management ("BNPP AM") announced that it has been appointed to manage a diversified private credit portfolio on behalf of Nest, a defined contribution workplace pension scheme created as part of the UK government's 2008 workplace pensions reforms to facilitate auto-enrolment. The mandate marks Nest's move into private credit, which Nest CIO Mark Fawcett described as an important step in developing its investment strategy and delivering strong risk-adjusted returns for members.
BNPP AM will establish an open-ended diversified private credit fund, initially consisting of exposure to infrastructure debt, commercial real estate debt, European mid-market loans, UK SME loans and US mid-market loans. The US mid-market loans will be originated through the partnership between BNPP AM and BNP Paribas Corporate & Institutional Banking's US Leveraged Finance Group. The fund will be run as a collaboration between BNPP AM's Multi-Asset, Quantitative & Solutions (MAQS) division, which will manage strategic asset allocation to optimise the illiquidity premium of the underlying asset classes, and its Private Debt & Real Assets (PDRA) division, whose specialist teams will originate private market transactions. The fund will offer active asset allocation in evergreen form, with principal repayments and interest reinvested to provide a total return for Nest's members.
Guy Davies, UK CEO of BNP Paribas Asset Management, said the firm was proud to have been selected and expects a long-term strategic partnership. He said the mandate combines BNPP AM's investments in its private debt platform, pensions solutions business and sustainable investment offering, enabling Nest's individual DC members to access private markets with lower volatility and enhanced returns relative to public market equivalents. Philip Dawes, Head of Sales for the UK & Ireland, said BNPP AM adapted its existing approach to managing diversified private credit and cashflow-driven investing for DB schemes to serve DC schemes. The mandate will invest according to ESG principles set by the firm's Global Sustainability Centre and includes impact investing elements such as UK SME loans. Dawes added that many underlying transactions will be identified and structured with the wider BNP Paribas Group.
Nest's Mark Fawcett said that in a very competitive tender process, BNPP AM's expertise, commitment to ESG and innovation stood out. The announcement was issued by BNPP AM, with press contact information for Nest provided by Ben Ward.
BNPP AM will establish an open-ended diversified private credit fund, initially consisting of exposure to infrastructure debt, commercial real estate debt, European mid-market loans, UK SME loans and US mid-market loans. The US mid-market loans will be originated through the partnership between BNPP AM and BNP Paribas Corporate & Institutional Banking's US Leveraged Finance Group. The fund will be run as a collaboration between BNPP AM's Multi-Asset, Quantitative & Solutions (MAQS) division, which will manage strategic asset allocation to optimise the illiquidity premium of the underlying asset classes, and its Private Debt & Real Assets (PDRA) division, whose specialist teams will originate private market transactions. The fund will offer active asset allocation in evergreen form, with principal repayments and interest reinvested to provide a total return for Nest's members.
Guy Davies, UK CEO of BNP Paribas Asset Management, said the firm was proud to have been selected and expects a long-term strategic partnership. He said the mandate combines BNPP AM's investments in its private debt platform, pensions solutions business and sustainable investment offering, enabling Nest's individual DC members to access private markets with lower volatility and enhanced returns relative to public market equivalents. Philip Dawes, Head of Sales for the UK & Ireland, said BNPP AM adapted its existing approach to managing diversified private credit and cashflow-driven investing for DB schemes to serve DC schemes. The mandate will invest according to ESG principles set by the firm's Global Sustainability Centre and includes impact investing elements such as UK SME loans. Dawes added that many underlying transactions will be identified and structured with the wider BNP Paribas Group.
Nest's Mark Fawcett said that in a very competitive tender process, BNPP AM's expertise, commitment to ESG and innovation stood out. The announcement was issued by BNPP AM, with press contact information for Nest provided by Ben Ward.
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