BA Pension scheme NAPS seeks to offload £500m portfolio

British Airways Pensions’ New Airways Pension Scheme is looking to sell a £500 million ($576 million; €580 million) private equity portfolio of LP interests, Secondaries Investor has learned.

The UK pension scheme launched the process in late October and has hired Campbell Lutyens to advise on the process, according to three sources familiar with the matter.

The process is understood to have been long planned as part of the strategy implemented by outsourced CIO BlackRock.

Details of the portfolio’s makeup are unclear.

BA Pensions appointed BlackRock as OCIO for around £21.5 billion of its pension schemes’ assets last year, taking the reins from in-house provider British Airways Pension Investment Management.

Both BA and Campbell Lutyens declined to comment.

Secondaries Investor understands that the sale is not linked to the recent pension fund crisis in the UK, related to liability driven investing strategies.

As regulation has intensified, operational costs have risen and investment complexity has increased, so UK pensions have been looking to outsource their investment capabilities, a statement by BA Pensions and BlackRock said at the time of the partnership.

“Alongside these external drivers, the [BA] Schemes have continued to mature, and their investment needs have changed considerably, requiring an increased focus on managing investments to provide an income that matches members’ pension benefits,” it added.

Private equity will still have a place in New Airways Pension Scheme following the sale, Secondaries Investor understands.

BlackRock took on assets directly under management for Airways Pension Scheme and New Airways Pension Scheme in June 2021, with BAPIML employees and some employees of British Airways Pension Services Limited also moving across to the asset manager.

The agreement was forged following the deferral of £450 million of pension deficit contributions from BA, according to media reports. BA struck an agreement with trustees to delay its £37.5 million a month payments into the New Airways Pension Scheme until September last year.

LP-led transaction volume recovered market share in the first half of this year, making up 53 percent of the $59 billion of secondaries activity globally compared with 40 percent of the $48 billion of volume across the same period last year, according to a report from Lazard.

Although some LPs were still waiting on third quarter marks before launching, the adviser did anticipate LPs would turn to the secondaries market as distributions slow in the following 12 to 24 months, with the caveat bid-ask spreads will moderate volumes if private equity valuations do not reflect their public counterparts.

Large LP sales from UK institutional investors have been choppy in recent years. The British government’s attempt to offload the Royal Mail Pension Plan private equity portfolio in 2017 stalled due to a disagreement over pricing, Secondaries Investor reported at the time.

Universities Superannuation Scheme, the UK’s largest public pension, has sold multiple private markets portfolios to buyers including Ardian.