Hermes Fund Managers (Hermes) has held an interim close on its Hermes GPE Infrastructure Fund, having raised an additional £210 million (€264 million; $359 million) to bring the total amount raised so far to more than £700 million.
A spokesperson for Hermes said the fund has a final target of £800 million, although it has the capacity to increase this by an unspecified amount.
Hermes has raised capital from several UK local government pension schemes, with the latest £210 million allocation coming from several clients including the Santander (UK) Common Investment Fund (Santander CIF).
Santander CIF pools assets backing legacy pension liabilities arising from Grupo Santander’s UK acquisitions such as Abbey National and Alliance & Leicester. It has combined assets of £8 billion and is one of the 30 largest pension schemes in the UK.
“Investing in infrastructure assets is an important component of our asset allocation strategy, reflecting the natural hedge for liabilities and the chance to utilise our illiquidity for best reward,” said Antony Barker, director of pensions at Santander UK, in a statement.
Barker added that the commitment to Hermes is Santander CIF’s first dedicated infrastructure commitment. Hermes was selected because it offered “the opportunity to tailor a direct and indirect portfolio that satisfied our risk and return requirements and, more importantly, an accelerated deployment of cash into new and secondary investments at attracting pricing”.
Altogether, Hermes now has £2.7 billion of infrastructure assets under management, including a £2 billion direct investment managed account programme for the BT Pension Scheme.
The infrastructure team currently manages 11 assets valued at around £1.2 billion, which are mainly direct investments in UK core and value-added strategies. Investments have included the likes of water utility Anglian Water Group, wind energy firm Fallago Rig and solar energy firm A Shade Greener.
The firm as a whole, which manages assets on behalf of more than 200 clients, has almost £27 billion in assets under management altogether.