South Yorkshire Pension fund dips toe into fintech with £7.5m Augmentum investment

Pension funds have typically been reticent to invest into venture capital funded investments but could that be about to change?

The South Yorkshire Pensions Authority has bought a 4.99 per cent stake in the £150m Augmentum Fintech investment trust. 

Augmentum is the only listed fund specialising in buying equity stakes solely in fintech businesses. It launched in 2018 and now has c.16 portfolio holdings including Zopa, Monese, iwoca and Tide.  

It has returned c.27 per cent since listing two and half years ago, outperforming the FTSE All Share, which has fallen by more than 10 per cent over the period. 

The South Yorkshire Pensions Authority, which invests on behalf of local councils and other municipal services, goes back 46 years. It manages c.£9bn of assets. 

In its last annual report, published in July, Tim Levene, CEO of Augmentum Fintech, said that Covid-19 is changing behaviours in a manner bullish for fintech firms by accelerating the digitisation of financial services.

"[This] has created significant opportunity for further disruption. Fintech per se finds itself at the centre of this change and we expect to capitalise on a once in a generation transformation in digital adoption," he said.

"We anticipate that over the coming 12 months there will be a number of compelling investment opportunities," he added.

"With private companies staying private for longer, a trend that continues to persist, we expect to deliver compelling venture returns over time,” he said.