Key Takeaways
- • UK private capital funds hold £190 billion in available capital expected to be deployed over the next three to five years, representing significant dry powder for institutional investment across the region.
- • Private capital already contributes nearly £200 billion annually to the UK economy, with momentum building following recent government initiatives to unlock pension fund capital through the Mansion House Accord.
- • The Investment Association has published recommendations to boost private market investment, including strengthening institutional reforms, consolidating DC schemes into "mega-funds," and supporting LGPS consolidation to reduce structural barriers.
- • Expanding retail access to private markets through Long-Term Asset Funds (LTAFs) within Stocks and Shares ISAs, coupled with transparent risk and fee disclosures, is identified as a key growth lever for broadening participation.
- • Maintaining a transparent, regularly updated government project pipeline across eight high-growth sectors—aligned with the Modern Industrial Strategy and 10-Year Infrastructure Strategy—is essential to sustain deal flow and investor confidence.
Summary
The UK investment management industry is mobilizing to accelerate private market investment by addressing structural, regulatory, and accessibility barriers that currently limit capital deployment. The Investment Association has outlined a comprehensive set of recommendations designed to unlock further growth in an asset class that already contributes nearly £200 billion annually to the UK economy. With £190 billion in available capital held by UK-based private capital funds and expected to be deployed over the next three to five years, significant momentum exists to expand institutional participation and drive economic growth and global competitiveness.
The recommendations focus on four principal areas. First, institutional reforms must be strengthened through product development and education initiatives that help pension schemes navigate the practical implementation of the Mansion House Accord. This includes supporting the consolidation of smaller defined contribution (DC) schemes into larger "mega-funds" and facilitating Local Government Pension Scheme (LGPS) consolidation to achieve the scale necessary for efficient private market investing. Second, policymakers must maintain a transparent, regularly updated pipeline of investable projects aligned with the Modern Industrial Strategy and the 10-Year Infrastructure Strategy, ensuring clarity around the eight designated high-growth sectors that qualify for capital deployment.
Third, retail investor participation represents an underutilized growth vector. The IA recommends permitting Long-Term Asset Funds (LTAFs) within Stocks and Shares ISAs to broaden access to long-term private market opportunities. This expansion must be accompanied by clear, consistent, and transparent disclosures on risk, liquidity, and fee structures to enable informed decision-making among retail investors. Fourth, industry-wide education campaigns are necessary to elevate awareness of private markets' role in portfolio construction, address historical risk aversion, and communicate the return characteristics that differentiate this asset class from public equities and fixed income.
Recent government initiatives, particularly those aimed at unlocking pension fund capital, have catalyzed momentum in the sector. However, realizing the full potential of the £190 billion available capital requires coordinated action between regulators, asset managers, pension trustees, and policymakers to address both structural constraints and information gaps that currently limit deployment velocity and retail accessibility.
The recommendations focus on four principal areas. First, institutional reforms must be strengthened through product development and education initiatives that help pension schemes navigate the practical implementation of the Mansion House Accord. This includes supporting the consolidation of smaller defined contribution (DC) schemes into larger "mega-funds" and facilitating Local Government Pension Scheme (LGPS) consolidation to achieve the scale necessary for efficient private market investing. Second, policymakers must maintain a transparent, regularly updated pipeline of investable projects aligned with the Modern Industrial Strategy and the 10-Year Infrastructure Strategy, ensuring clarity around the eight designated high-growth sectors that qualify for capital deployment.
Third, retail investor participation represents an underutilized growth vector. The IA recommends permitting Long-Term Asset Funds (LTAFs) within Stocks and Shares ISAs to broaden access to long-term private market opportunities. This expansion must be accompanied by clear, consistent, and transparent disclosures on risk, liquidity, and fee structures to enable informed decision-making among retail investors. Fourth, industry-wide education campaigns are necessary to elevate awareness of private markets' role in portfolio construction, address historical risk aversion, and communicate the return characteristics that differentiate this asset class from public equities and fixed income.
Recent government initiatives, particularly those aimed at unlocking pension fund capital, have catalyzed momentum in the sector. However, realizing the full potential of the £190 billion available capital requires coordinated action between regulators, asset managers, pension trustees, and policymakers to address both structural constraints and information gaps that currently limit deployment velocity and retail accessibility.
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