London-based Gresham House, a specialist alternatives asset manager, has raised £300 million ($369 million; €330 million) for its British Strategic Investment Fund, holding final close on a vehicle it launched in 2017.
Six Local Government Pension Schemes – including the Royal County of Berkshire Pension Fund and Teesside Pension Fund, which served as anchor investors – as well as the Greater London Authority’s London Strategic Reserve Fund, committed to BSIF. The fund invests in UK infrastructure and social housing with the requirement that each investment have a positive social and/or environmental impact.
While Gresham House reached its £300 million target, final close was achieved around 18 months later than the firm originally expected when it announced a first close on £150 million in June 2017.
“The delay in reaching the final close reflected in part the priorities of the LGPS community over the last two years, as they focused time and resources on meeting their objectives with respect to pooling public market strategies, while seeking further clarity on future private market programmes,” the firm’s head of institutional business, Heather Fleming, told Infrastructure Investor.
BSIF was developed “as an investment solution for the LGPS community, where we saw an opportunity to provide access to niche, sub-threshold, regional opportunities within a diversified strategy”, that would complement larger core infrastructure allocations, she said.
The fund has a 12-year time horizon and invests in renewable energy, battery storage, waste disposal, key worker accommodation and vertical farming, which the firm classifies as infrastructure. The average ticket size is less than £50 million and the fund targets a net IRR of 8-10 percent and yield at the top of a 3-5 percent range.
BSIF aims to have a positive impact by investing in projects that support job creation, improve health and social care or that deliver environmental benefits, according to the firm. Asked how the firm measures the impact of BSIF’s portfolio, Fleming referred us to the firm’s sustainable investment policy for housing and infrastructure.
According to that document, in the waste management sector, Gresham House invests in projects that help to sustainably manage waste outputs, by diverting waste from landfills, for example, or enabling reuse or recycling.
In the case of social housing, the firm invests in projects that address the housing capacity gap in the UK, including addressing the needs of the key worker demographic, by providing affordable homes that are built from sustainable materials where possible and which include integration of low carbon interventions such as photovoltaic panels, biomass district heating systems, battery storage and EV charging, where feasible.
Some of the assets comprising BSIF’s portfolio to date, include vertical farming platform Fischer Farms; Wathegar 2, an operational wind farm in Scotland; and Rise Homes, a Private Rented Sector platform.