BNP Paribas AM wins private credit mandate for Nest pension scheme

The banking giant's asset management arm has been expanding its operations in private credit and lending, particularly for SMEs over the past year or so.

The National Employment Savings Trust (NEST) has appointed BNP Paribas Asset Management to run a diversified private credit portfolio 

Nest is a defined contribution workplace pension scheme created as part of the UK government’s 2008 workplace pensions reforms to facilitate auto-enrolment.

BNPP AM will create an open-ended diversified private credit fund, initially consisting of exposure to infrastructure debt, commercial real estate debt, European mid-market loans, UK SME [Small and Medium-sized Enterprises] loans and US mid-market loans.  

The fund will offer active asset allocation in evergreen form, with principal repayments and interest reinvested to provide a total return for Nest’s members.

Guy Davies, UK CEO of BNP Paribas Asset Management, says the firm has in recent years made significant investments into its private debt platform, as well as its pensions solutions business and sustainable investment offering. 

"This mandate brings together all three in the form of a market-leading innovation that will enable Nest’s individual DC members to access private markets that can offer lower volatility and enhanced returns relative to their public market equivalents.  It is also testament to our commitment to private debt and real assets, as well as our ability to tailor solutions for pension plans which offer diversified exposure on a global basis." 

Mark Fawcett, Chief Investment Officer of Nest, said “Nest’s move into private credit is an important step in developing our investment strategy and helping to deliver the strong risk-adjusted returns we want for our members.  In a very competitive tender process BNP Paribas Asset Management’s expertise, commitment to ESG and innovation really stood out and caught our attention. They’ve found a way in which we can confidently allow our members to benefit from the lower volatility and enhanced returns private markets can offer.”