Examples of private assets that contributed to performance in FY 2023-24
Private assets
Private assets include private equity, property and infrastructure. This includes both traditional assets like utilities, toll roads and airports as well as newer growth areas like digital and energy transition. This can also include investments with different risk return patterns that give CSC customers downside protection, while allowing them to participate in growth upside.
Fit for the future
We continuously scan for quality assets that are well positioned for underlying structural change - for example those involved in digital and energy transition, or medical innovation, where the demand from growing and aging populations is high. Future-fit assets can generate high business growth rates, somewhat insulated from cycles in broader economic activity, and can therefore help our portfolios withstand different economic, policy, political and market environments over the long timespan that is relevant for our customers’ retirements.
Our portfolios benefit the most when these assets are purchased before others recognise their value and bid their prices up. However, being an early mover can also bring investment risks associated with unproven business models, inexperienced management teams, slower than expected adoption rates (e.g. due to high costs or complex implementation) or rapid obsolescence when one technology advance is superseded by another. We mitigate the risks associated with being an early mover by forming strategic partnerships with specialist investment managers.
Examples of investing selectively in building new future-fit infrastructure assets in 2023-24
Examples of some new additions to our private equity portfolio in 2023-24
Innovative pharmaceuticals
- CSC has participated, over a number of years, in funding clinical trials of a medicine to treat a rare and life-threatening disorder in which red blood cells break apart prematurely.
- Following successful trials and regulatory approvals across three continents, this investment generated strong returns to our customers, while improving the quality of life for patients.
Healthcare technology
- CSC financed the development of a novel defibrillator to help patients at risk of cardiac arrest from ventricular arrhythmias (irregular heartbeats). Its innovative design improves on traditional defibrillators by reducing risks of infection and other complications, as it is less invasively placed under the skin.
- After receiving regulatory approvals, our return is expected to be generated from a combination of guaranteed payments and royalties based on product sales, uncorrelated to the economic cycle.
Increased access to education
- CSC provided equity capital to the world’s largest provider of K-12 private education.
- This company provided diverse curricula and educational choices across multiple price points with schools across the Middle East and Europe. Today, the company educates ~138,000 students.
- It delivered strong investment returns over our holding period, while improving access to quality education globally.
Carbon capture from waste biomass
- CSC has made a very early-stage investment in an enterprise that converts waste biomass into biochar via a patented process involving high pressure and high temperature, and ultra-fast processing that enables industrial scale.
- Biochar is commonly used to improve soils, however the superior durability of the biochar produced by this process shows promise for improving the structural performance of concrete and enabling reductions in the amount of cement used.