London pensions reach £399m first close on Stepstone-partnered fund

A group of six London-based pension funds have committed £399 million ($511.2 million; €463 million) to an infrastructure fund managed in partnership with Stepstone.

The open-ended London Collective Investment Vehicle Infrastructure Fund reached a first close following the initial commitments and will remain open to the remainder of the 32 pensions under its umbrella.

The partnership with Stepstone will see the asset manager support investment selection, portfolio construction and reporting services

The fund is structured to invest at least 80 percent in other infrastructure funds, with 20 percent open for direct and co-investments, a spokeswoman told Infrastructure Investor. According to documents from the Brent Pension Fund, which agreed this year to commit £50 million to the fund, the vehicle is targeting a net IRR of 8-10 percent and a cash yield of 4.5 percent, with 50-70 percent of investments focused on Europe with a UK bias. Another known investor is The Harrow Council Pension Fund, which agreed to commit 7.5 percent of its £816 million total assets to the vehicle

The LCIV Infrastructure Fund has already invested in a Europe-focused renewables vehicle, the identity of which it declined to reveal. The LCIV Infrastructure Fund has a minimum allocation of 25 percent towards renewables.

However, this was deemed to be too low by the Tower Hamlets Pension Fund, which has yet to invest in the vehicle.

“The committee noted that it may prefer for a potential allocation to infrastructure to be fully focused on renewable energy,” the pension said in documents released towards the end of September.

“Clearly the fund is open to all 32 local London authorities,” an LCIV spokeswoman said. “As most LLAs are undertaking a strategic asset allocation review at the moment we will not have clarity on how many will allocate to infrastructure until these reviews are complete.”