Phoenix Group private credit allocation exceeds £8bn

Phoenix Group’s private credit and broader illiquid allocation has moved past the £8bn mark as the UK consolidator accelerates its push toward a 40% illiquids target across its balance sheet. The strategy is anchored in ramped-up origination, growing annuity flows and a willingness to finance diversified private credit pools as the group increases its focus on spread and matching-adjustment income.

Phoenix set out its illiquid ambition for 2021, stating that it intends to originate around £3bn of illiquid assets in the year. The group said it is investing in its origination capabilities, signalling a shift from opportunistic allocations to a more programmatic sourcing model across direct lending, private placements and infrastructure. Illiquids also include smaller holdings of commercial real estate and local authority loans, giving the portfolio a multi-sector profile rather than a single-asset-class bet. Phoenix stated that it is happy to finance diversified pools of private credit, underlining a preference for scaled, multi-borrower structures that can be slotted efficiently into annuity-backed portfolios. This sits alongside the group’s regular annuity activity, with Phoenix transacting approximately £6–8bn of annuities each year, providing a recurring liability pipeline for illiquid deployment.

Phoenix has tied its investment strategy directly to cash generation, setting a new one-year cash generation target range of £1.5bn to £1.6bn for 2021. The group also reported that it remains on track to deliver its upgraded five-year cash generation target of £6.8bn for 2019–2023, with illiquids a key contributor to that profile.