London, UK – Major pension funds in the UK are capitalizing on significant discounts in the market to acquire real estate and private assets while other retirement funds are selling off less liquid holdings.
The Pension Protection Fund (PPF), a £32 billion retirement scheme, and Border to Coast Pensions Partnership, a £60 billion local authority pool, are among the funds taking advantage of opportunities in the secondary market to make profitable investments.
PPF recently purchased a portion of a property fund at a 35% discount to its net assets from another pension fund. Barry Kenneth, the chief investment officer, mentioned that the discount was offered by the seller to all shareholders in the fund.
With up to £350 million allocated for property investments, PPF aims to capitalize on the current market conditions by investing in funds available for sale in the secondary market.
As defined benefit pension schemes prepare for potential buyouts by insurance companies, they are selling off illiquid assets at steep discounts. This trend has led to notable opportunities for buyers in real estate, private debt, and private equity portfolios.
In response to the market dynamics, larger public sector pension funds are taking advantage of the situation, leveraging their liquidity to acquire quality assets at discounted prices quickly.
Industry experts note that while discounts on assets have started to narrow due to increased interest from pension funds, there is still significant market activity, with some assets being acquired at discounts of 30-40%.
As values adjust and competition intensifies, the market is witnessing a shift, with some UK property funds trading at or even above net asset value, demonstrating a potential normalization in pricing dynamics.
Overall, the current landscape presents a unique opportunity for pension funds to strategically position themselves in the market and make sound investments in real estate and private assets.