London pension mulls private equity, infrastructure investments

The £3.2bn London Pension Fund Authority is looking to redeploy part of its cash pile in investments in private equity and infrastructure.

UK public pension fund London Pension Fund Authority (LPFA) is to pursue investments in infrastructure and private equity in a move to reduce its cash reserves.

LPFA, which has £3.2 billion (€3.5 million; $5.1 billion) under management, said in its recently released annual report wants to invest some of its cash, worth around 7 percent of the pension’s assets, in investments in private equity and infrastructure.

“We are looking for investment in private equity and infrastructure, but the problem is that there has been precious little distribution at the moment; not a lot of IPOs and little trade in that area,” Michael Taylor, the pension’s chief executive, said in an interview with Reuters.

Of its £2.1 billion active fund, LPFA already has 9 percent invested in private equity and 5 percent in infrastructure investments. Its investment committee has given infrastructure a maximum allocation of 7.5 percent of this active fund’s assets. LPFA also has a £1.1 billion sub-fund used for paying pensions.

The LPFA is an administering body of the UK’s Local Government Pension Scheme. It has more than 75,000 members from around 200 employing authorities across London.

LPFA’s announcement comes as several other pension funds are looking to increase their exposure to infrastructure investments. In July the $118.8 billion California State Teachers’ Retirement System (CalSTRS) created an allocation to a new asset class it called “absolute return”, which included infrastructure investments.

The California Public Employees’ Retirement System (CalPERS) also wants to increase its investment in infrastructure and is currently in the process of appointing an infrastructure consultant to advise on its investments in the asset class.