GLIL, the UK-based pension fund infrastructure pool, plans to increase its deployable funds to at least £2 billion ($2.7 billion; €2.3 billion) as part of its relaunch as a regulated structure.
The scheme, initially formed in 2015 by the Greater Manchester Pension Fund and the London Pensions Fund Authority, currently has a size of £1.275 billion following an expansion in December 2016 which saw the introduction of the Lancashire Pension Fund, West Yorkshire Pension Fund and the Merseyside Pension Fund.
However, the platform last week announced its intention to act under a more regulated structure which will allow GLIL to bring in additional pension schemes to boost its investment capabilities.
“We’re planning on the basis of existing member allocations, plus any new members, quite comfortably moving up towards the £2 billion mark,” Chris Rule, managing director and chief investment officer of the Local Pensions Partnership between Lancashire and London, told Infrastructure Investor. “Where we go beyond £2 billion is subject to a number of decisions taken by prospective new joiners. At the moment, we’re planning on £2 billion being quite achievable relatively quickly and then we’ll see where we get to from there.”
Peter Wallach, director of pensions at Merseyside, added that “the more progressive expressions of interest” have come from Local Government Pension Schemes, although a handful of inquiries have also come from pension funds beyond this pool.
“It’s all going to be corporate defined benefit schemes or public sector DB schemes, I don’t see this being a broader market than that,” he said.
Since its formation, GLIL has invested around £600 million in greenfield sites, regulated utilities and transport upgrades, including rolling stock deals, the 523MW Clyde wind facility in Scotland and a stake in Anglian Water. This has so far generated a double-digit IRR, although Rule and Wallach expressed a note of caution on what is a relatively young portfolio with both greenfield and brownfield assets.
“For GLIL, there is a preference for core infrastructure, so I think the type of projects we’re investing in, we are very aware of construction risk and go a long way to try to manage risk in that area,” Wallach added.
The contributions from the pension funds to GLIL constitute about a third of its overall infrastructure commitments and although it is orientated towards the UK, the scheme can invest into Europe.
“At the moment, 25 percent of its allocation can be outside the UK,” explained Rule. “So, we have a number of opportunities outside the UK. We haven’t executed on those to date, but I expect over the course of time we will do.”