Independent Trustee Company Blog

Wednesday, November 16, 2011

Pension Investment in Private Companies

Self-administered pensions can invest in a wide variety of investment products. Publically quoted shares and other securities, investment bonds, property and deposits are some of the more common.

However, in the last couple of years we have seen increasing interest in investment in private companies. It has traditionally been, and indeed remains, a high risk area, but, given the lack of alternative sources of finance, private companies that would otherwise find a ready market for their fundraising through the more usual routes are having to cast their nets wider. Many have come to appreciate the benefits of investment by pension funds, from both traditional pension fund investors and small self-administered schemes.

Investments structured to accept funding from self-administered pensions can be collective investment structures, but more typically an individual with a self-administered pension structure will want to make an investment into an ambitious SME. In the last three years alone, over €7.2 million has been invested in this way through ITC into a wide variety of companies, from wind energy companies and a provider of prepaid electricity meters through software development companies, an internet daily deals/social networking group of websites and electronic media companies to property development companies. Any trading company can profit from such investment.

Investments have to be on proper commercial terms. A private arrangement to fund your own business or that of a family member or friend or one that is not commercial would not be acceptable for pension investment, but a properly structured investment on market terms into a trading company would always be appropriate.

If you have any clients interested in making an investment into a private company through their pension schemes, please contact us.


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