The shareholding may or may not turn out to be a \u201cproductive investment\u201d, as the big buzz-phrase of asset management goes (for example if it helps to facilitate a successful bank merger). But it is certainly a sizeable gamble on a transaction that logically has no place in the investment portfolio of a scheme that should be focusing on providing stable retirement incomes for hundreds of thousands of pensioners, not using their funds to play political power games.<\/p>\n
More commonly these days \u201cproductive investment\u201d is associated with private capital, reflecting the genius of the sector in sequestering the label and then engendering echoes<\/a> of approval from policymakers on both sides of the Atlantic.<\/p>\n Sure enough, London\u2019s Lord Mayor is this week stepping up his push for pensions to boost their private capital allocations. Building on May\u2019s Mansion House Accord<\/a> pledge that signatory pension funds would put more into areas such as private equity and debt, he has now coaxed large employers into pledging they will look less at fees and more at the return potential of assets such as private capital when allocating assets.<\/p>\n Legal & General, meanwhile, last week struck a deal<\/a> with Blackstone to allocate as much as $20bn of its annuity funds to private credit.<\/p>\n Most substantively, one of Europe\u2019s fastest-growing insurance companies went a step further with a big acquisition. Athora, the Apollo-backed insurance vehicle that has been buying up pension schemes across continental Europe, announced the purchase<\/a> of the UK\u2019s Pensions Insurance Corporation, itself an acquirer of employers\u2019 defined benefit schemes.<\/p>\n Athora is 25 per cent owned by Apollo \u2014 both directly and via the private capital giant\u2019s US insurance subsidiary Athene. But even if that line is largely dotted, Apollo\u2019s influence is clear. It controls five out of 11 board seats (though it points out it has a board-level \u201cconflicts committee\u201d chaired by an independent director).<\/p>\n And it has followed a clear modus operandi for the European pension schemes it spent the past few years hoovering up. \u201cFollowing new acquisitions,\u201d Athora says in its annual report, \u201cwe invest and rotate the acquired asset portfolio towards our target Strategic Asset Allocation\u201d. That means ensuring there is a \u201cgreater proportion of return seeking assets\u2009.\u2009.\u2009.\u2009which are primarily high-quality private credit assets\u201d. <\/p>\n Private capital has clear merits. It tends to be long-termist in structure, in line with pension liabilities. Though fees may be higher, returns may be too. And as a fast-growing part of the corporate finance landscape investors cannot afford to ignore it.<\/p>\n Recommended<\/p>\n But there are snags. One is that, unlike their publicly traded counterparts, private capital investments are not valued transparently or, in some cases, accurately. In March, the UK\u2019s Financial Conduct Authority, which supervises asset managers, published a detailed study<\/a> on private capital valuation practices. It found substantial causes for concern. It urged firms to manage conflicts of interest more effectively and ensure that they conduct independent valuations, underpinned by proper governance and documentation systems.<\/p>\n The potential conflicts are all the more acute at insurance companies that are themselves controlled by private capital businesses \u2014 either wholly as has become a trend in the US, or partly as in Europe, where regulators appear more hesitant about full-fat alliances.<\/p>\n Twenty years ago, \u201cmasters-of-the-universe\u201d bankers were generally seen as the smartest people in finance. But bank shareholders and taxpayers alike learned in 2008 that they had stacked the stakeholder odds in their own favour. Today as the best brains gravitate towards asset management and private capital in particular, it is pensioners who should perhaps be wary.<\/p>\n![\"Charlie](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/07\/https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net.jpeg\")
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