Horizon II is the second in a series of three, $1bn private equity mandates awarded to Federated Hermes by the BT Pension Scheme (BTPS). The programme began investing in 2019 and holds a diversified global portfolio of primary funds and co-investments focused on the lower and mid-market buyout space.
BTPS, one of the UK’s largest private sector pension schemes, has £35.7bn of assets under management and 258,000 members, paying out c.£2.8 billion in pension payments to the 212,000 to retired members and their beneficiaries.1 The preferred equity instrument provides an innovative solution to manage the liquidity profile of the BTPS portfolio whilst retaining upside potential in the Horizon II programme.
A core tenet of Federated Hermes Private Equity’s investment strategy is to exit investments at optimal points in a fund’s lifecycle, effectively unlocking and returning value to investors by drawing on a range of differentiated liquidity strategies. Since 2010, Federated Hermes Private Equity has distributed $2.7bn2 to investors through proactive liquidity solutions, delivering consistent outperformance in respect of its distributions-to-paid-in-capital ratios.
The transaction was executed by Federated Hermes Private Equity’s secondaries team, which has a sell-side track record extending more than a decade, supplemented by a more recently established dedicated secondary buy-side mandate.
We endeavour to stand out in the industry for the strength of our liquidity offering and we are pleased to announce the successful delivery of this outcome for BTPS. We believe that the flexibility of preferred equity financing is the optimal solution to deliver BTPS’ investment objectives for Horizon II.
Sanjeev Phakey, Head of Secondaries, Federated Hermes Private Equity
Today’s announcement is further evidence of our – and Federated Hermes Private Equity’s – commitment to proactively managing the BTPS private equity portfolio. We are pleased to have delivered this innovative solution for our members.
Wyn Francis, CIO, Brightwell
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1 As at June 30, 2024
2 Source: Federated Hermes Private Equity. Excludes cash flows from programmes that have generated exits for original investors but that have continued to be managed on behalf of new secondary investors
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