Strategic View: Sterling 20 Investor Partnership

Strategic View: Sterling 20 Investor Partnership

Wrapper vs. Catalyst

Analysis of the Sterling 20 Group – Separating Political Mandate from Operational Reality.

On 21st October 2025 at the Regional Investment Summit in Birmingham the Chancellor announced the Sterling 20 investor partnership. 

The Sterling 20 is a formal partnership of 20 major UK pension and insurance providers, created in coordination with the Government and the City of London. Sterling 20 is a publicly codified, non-binding strategic alliance designed to pursue common investment goals, not a single legal entity. 

Our core assessment is that it is fundamentally a political wrapper for existing capital. However, this wrapper serves as a powerful catalyst for necessary systemic change by imposing coordination and accountability on the deployment of long-term institutional funds. Its value is in de-risking the asset class at a macro level, not in solving individual deal flow issues.

Assessment Political Reality Operational Value
New Capital? No. The capital is pre-existing long-term institutional assets under management (AUM). Forces accelerated deployment of funds already mandated for private markets.
Coordination? Yes, but legally restricted. Focus is on Standardisation, not illegal Deal Sharing or allocation. Creates the necessary scale and governance to de-risk illiquid UK assets for pension schemes.
True Objective PR exercise for the Treasury / City / Government claiming credit for industry compliance with the Mansion House Accord. Addresses systemic market failure: the complexity of packaging private assets for UK defined contribution (DC) schemes.

1. The Mandate and Membership

The partnership is the operational arm of the UK’s push to increase domestic investment, building on the Mansion House Accord’s intent to raise DC scheme allocation to private markets.

Core Members (The Sterling 20)

Insurers / Managers Pension Providers / Schemes
Aegon, Aon, Aviva, L&G, M&G, Phoenix Group, Rothesay, PIC (Pension Insurance Corp.), SEI, LifeSight by WTW and Mercer. Nest Corporation, NOW Pensions, People’s Partnership, Royal London, Smart Pension, TPT, PPF (Pension Protection Fund), USS (Universities Superannuation Scheme), NatWest Cushon

The Investment Imperative

These institutions are bound by fiduciary duty. The partnership’s existence implies they believe that collectively addressing three key barriers will deliver better long-term returns for their members:

  1. Standardisation: Lack of a standardised product—such as the long-term asset fund (LTAF), an FCA-authorised vehicle for illiquid assets—suitable for daily-dealing DC schemes.
  2. Liquidity: Low liquidity in long-term UK private assets deters investment.
  3. Governance/Cost: Complexity and cost disclosures often penalise illiquid asset investment.

2. Fund Manager Revenue Structure

The funds participating in the Sterling 20 generate revenue from the member pots via a two-part charging mechanism, a structure the industry successfully lobbied to reform in order to make illiquid asset investment viable.

Charge Type Mechanism Impact of Recent Regulatory Reform (for Illiquids)
Annual Management Charge (AMC) A flat percentage deducted annually from the total assets under management (AUM) in the member’s pot (typically capped at 0.75% for DC default funds). This covers standard fund operating and administration costs. Illiquid assets often have AMCs closer to 1% or higher, posing a challenge to the cap.
Performance Fees / Carried Interest A percentage of the profits earned above a set hurdle rate (e.g., 10-20% of profits, known as Carried Interest in private equity). Example: If a fund achieves a 15% return and the hurdle is 8%, the manager takes a percentage of the 7% excess profit. Government changes aim to allow these well-designed performance fees to be excluded or smoothed over a longer period, making LTAFs commercially attractive for managers.

3. Strategic Flaw: The “Pipeline” Myth

The primary justification cited by the Treasury – that the group will “identify” deals – is politically motivated and fails to recognise the commercial reality:

  • Deal Flow is Pre-Existing: Large institutional asset managers already have highly sophisticated teams for deal management. A lack of opportunities is not the core problem so much as the ability to employ capital successfully and rapidly.
  • The Constraint is Structure: The actual barrier is the difficulty in structuring regional projects (e.g., local infrastructure, social housing) into a format that meets the specific risk, return, and regulatory profile required by all 20 funds simultaneously.
  • No Shortcuts: The initiative announced no new planning, regulatory, or administrative shortcuts to speed up project approval. This is the single biggest operational weakness and source of continued execution risk. Projects remain hostage to local authority and national planning delays.

4. Operational Value: De-risking and Efficiency

The Sterling 20’s true contribution lies in its collective impact on the investability of the asset class:

  1. Collective Lobbying Power: The unified voice of £3 trillion in AUM has significant influence. This power is strategically used to demand systemic regulatory de-bottlenecking (e.g., simplifying the regulatory regime for Long-Term Asset Funds (LTAFs)) which benefits all members equally, without breaching competition rules.
  2. Asset Standardisation: The dialogue within the group drives the mandatory consensus needed to design common frameworks for packaging infrastructure and housing debt/equity. This mass standardisation creates scale, improves liquidity, and ultimately lowers the cost of deployment for all participants.
  3. Accelerated Deployment Mandate: Public commitments by funds like L&G (£2bn) and Nest (£100mn) place the onus on fund managers to accelerate capital deployment. This political pressure acts as a powerful governance mechanism to force cash off the sidelines.

Conclusion & Outlook

The Sterling 20 is not a spontaneous eruption of new capital but rather an imposed coordination mechanism designed to accelerate the fulfilment of pre-existing investment policy.

Its success hinges not on the government’s ability to “find” projects, but on the members’ ability to mass-produce suitable, standardised asset wrappers (e.g., LTAFs) fast enough to satisfy the accelerated political deployment window. If successful, it will drastically improve the financing environment for large-scale, long-term UK projects. If not, it will confirm the view that it was merely political grandstanding.

About the author

Tony Carroll

Tony Carroll

Principal

For over 30 years I’ve led high-value land acquisitions, development-promotions and regeneration programmes — bridging complex site origination and institutional capital deployment. My early career in architecture gave me a rigorous grasp of design, technical delivery and project-risk mapping. Since founding my development practice in 1996 I’ve focused on large-scale residential, purpose-built student accommodation and commercial investment assets.

I specialise in:

  • unlocking difficult / under-utilised sites for value creation

  • shaping robust structures that align land-owners, developers and institutional funds

  • delivering high-quality, placemaking-led assets that generate sustainable returns and community uplift

My professional philosophy is straightforward: to navigate complex challenges, find innovative solutions, and deliver tangible, high-quality assets that create lasting benefits for the communities where they are built.

My approach is direct: identify structural barriers early, engineer smarter deal-vehicles, execute with discipline. If you are a land-owner seeking to convert latent value into funded development, or an investor looking for scalable UK land-opportunities with development upside, let’s talk.

07770 734186

tony@tonycarroll.co.uk

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In the often-turbulent world of Westminster, the revolving door of ministerial appointments is a familiar sight. This past week, that door has spun once more for the housing sector, with a significant reshuffle at the Department for Levelling Up, Housing and Communities (DLUHC). As the dust settles, the key question for developers, planners, and investors is clear: does this signal a genuine change in direction, or simply a change of face?

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What to Watch For

In the coming weeks, we will be looking for key indicators of the new minister’s approach. Their first major speech, their responses during departmental questions in the Commons, and any initial statements on planning appeals will be scrutinised for shifts in tone and policy. Will the rhetoric focus on “beauty” and “gentle density,” or will it pivot to a more aggressive pro-development language of “growth” and “delivery”?

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We will be monitoring these developments closely, providing analysis on what these changes mean for our clients and the wider property landscape.

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