Octopus Investments, part of Octopus Group, today announces significant institutional fundraising across the group, amid growing global investor demand for investment opportunities in private markets. The Group raised £2 billion, over the 12 months to 31 March 2022, bringing the total institutional funds under management (FUM) to £4.6 billion, and furthering its mission to invest in the people, ideas and industries that will change the world. It also increased its pool of global institutional investors by 50%.
Octopus is a leading manager of alternative investments in the UK, with specialist expertise in renewable energy, venture capital, sustainable infrastructure, health and care real estate and commercial real estate debt. The past 12 months were the most successful for institutional fundraising at Octopus to date, as it increased its institutional FUM by more than 50%.
Notable fundraises included:
- Commitments to Octopus’ care home strategy to meet the needs of the ageing population: raised over £400 million from investors, including pooled and individual local government pension schemes and overseas investors from the Netherlands, Scandinavia, and Japan. The strategy increases the supply of UK quality care homes to release pressure on healthcare providers and improve quality of life for older demographics. The Greater Manchester Pension Fund is among committed investors, and the entire portfolio has committed to industry-leading net zero targets.
- Mandates to ramp up investment into renewable energy infrastructure: Octopus raised more than £800 million in total. The National Employment Savings Trust (NEST) committed a further £200 million in the period to invest in renewables projects in the UK and Europe, as part of its move to become a net zero carbon investor and to contribute to the renewable energy transition. Octopus also won an additional £150m corporate pension mandate to invest in renewable energy infrastructure, and £190m from a North American government pension plan to invest in the development of new renewable energy assets. Octopus has a growing pipeline of consultant-advised investors backing its open-ended diversified European renewables fund, with the Welsh Pension Pool being the latest investor to announce a commitment.
During the past year, Octopus became a B Corporation, demonstrating it cares as much about the impact of its investments, as the returns it generates for its investors. The institutional capital it raised over the previous 12 months will ensure it is able to advance positive impacts for people and the planet on a larger scale.
Chris Hulatt, Co-Founder of Octopus Group, said:
“Our client base has long been interested in private markets with a sustainable tilt, but we have seen a step change in commitments in the past year with additional capital being allocated to our strategies from investors across the globe. Healthcare and renewables are two particularly dominant trends, with the climate crisis and global pandemic putting a sharp focus on the role for private capital to drive tangible, positive change against these themes.
“While continuing to grow these strategies, we are looking closely at how to enable institutional investors to access growth companies. This will benefit the British entrepreneurs building world-leading companies and drive economic growth, while providing strong risk-adjusted returns and enabling greater end investor engagement. Central to this is working with the UK government on its consultation to remove the regulatory charge cap on pension schemes, that in most cases restricts them from accessing venture capital opportunities. This is a compelling private market opportunity that pension schemes should be able to access, alongside more traditional allocations.
“We have ambitious plans to grow our institutional investor base, bringing them innovative opportunities in specialist sectors that present both sustainability and compelling risk-adjusted return opportunities.”
Priorities for 2022
Building on this growth, alongside increasing appetite for sustainable private market investment strategies, our priorities for the year ahead include:
- Effective deployment opportunities that can truly move the dial for the global energy transition: the energy transition is central to the world achieving its net zero targets and to enhancing the UK’s energy security, and private capital will have a crucial role to play in supporting this. In the year ahead, Octopus will be continuing to support investors seeking renewable infrastructure investments, whilst also looking at the role for growth companies with solutions that provide the plumbing underpinning required infrastructure.
- Encouraging investment into growth companies in the UK: institutional investors are increasingly looking at the potential returns from venture capital, and Octopus has long championed the need to support UK growth companies. Octopus is supportive of the UK government’s consultation on the removal of performance fees from the charge cap for pension schemes, to hep unlock investment into growth companies, and has submitted a response to this consultation.
- Tapping into growing demand for UK private markets among Middle Eastern, Korean and Japanese investors: Octopus is seeing increased interest from global investors, with Korean and Japanese investors among those recently committing to Octopus strategies.
Jennifer Ockwell, Head of Institutional, said:
“Since our first ever institutional fundraise in 2014, we have seen significant growth in demand from global investors. This has been a record year for growth, with the strategies we have been running for many years really coming into their own amid heightened investor social conscience mid-pandemic, and as investors increasingly seek innovative real assets solutions to diversify and shelter from market volatility. We are increasingly engaging with investors in new markets, who are attracted by UK private market opportunities.
“External events over the past 12 months have led to more conversations with investors around how they can invest capital in ways that will achieve both profit and purpose, and we are committed to continuing to provide investors with innovative and impactful solutions that drive meaningful change.”
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