GMPF, LPFA launch £500m joint infra platform

The move follows LPFA’s creation, jointly with Lancashire County, of an asset-liability management partnership covering assets potentially worth more than £10bn.

The Greater Manchester Pension Fund (GMPF) and the London Pensions Fund Authority (LPFA) have announced the creation of a partnership to deploy up to £500 million (€660 million; $754 million) in infrastructure.

The initiative will see GMPF and LPFA seek to make joint investments over the next three to four years, with the intention to “hold them over the appropriate period for each individual investment”. Both UK pensions will be looking for deals in the vicinity of their respective cities, but aim to retain a “high degree of flexibility for suitable opportunities”, they said in a statement.

Transport, housing and renewable energy projects in London and Greater Manchester have been mentioned as possible investments in the duo’s pipeline.

“The creation of an infrastructure investment platform is another step towards closing our deficit. To meet our pensions liabilities we need a balanced portfolio that includes assets with a long-term profile,” said Susan Martin, LPFA chief executive, in the statement.

The move follows the launch last month by LPFA and Lancashire County Pension Fund (Lancashire County) of an asset-liability management partnership covering assets potentially worth more than £10 billion. The exact scope and shape of the arrangement have yet to be finalised, but its ambition is to help its proponents reduce costs and source fresh investment opportunities in a market they deem highly fragmented.

Martin told Infrastructure Investor in December that the partnership might open up to other institutions in the future, though the immediate focus was to set up the programme, determine its priorities and make it work.

LPFA, London’s largest local government pension, aims to have 30 percent of its capital invested in illiquid assets by 2016 – a target allocation that might increase to 40 percent as its partnership with Lancashire County gathers pace, Martin said.

Last February, LPFA pulled out of the Pensions Infrastructure Platform (PIP), a not-for-profit initiative led by the National Association of Pension Funds (NAPF) looking to raise up to £2 billion from UK institutions, citing concerns over risks and pricing.
GMPF, also a longstanding investor in infrastructure, had £242 million committed to 18 unlisted infrastructure funds as at March last year. Managers backed by the pension include 3i, EISER Infrastructure Partners, Equitix, Global Infrastructure Partners, Goldman Sachs, Henderson Equity Partners, iCON Infrastructure, Impax Asset Management, InfraRed Capital Partners and Meridiam Infrastructure.

The fund’s target rate of new fund commitments is £95 million per year, with an overall long term target allocation of 4 percent towards infrastructure.