Pensions Infrastructure Platform gains momentum

Royal London Group has confirmed it is in discussion with the UK’s National Association of Pension Funds over joining its £2bn infrastructure vehicle.

Pensions Infrastructure Platform (PIP), a fund launched last year by the National Association of Pension Funds (NAPF), could soon attract fresh pledges from UK investors.

Royal London Asset Management (RLAM), the investment arm of the country’s largest mutual insurer, has confirmed it is considering investing in the £2 billion (€2.4 billion; $3.3 billion) infrastructure-focused vehicle. Robert Talbut, RLAM’s chief investment officer, has been in discussions with the NAPF regarding the PIP, a spokesman told Infrastructure Investor today.

An investment by RLAM in PIP would be the asset manager’s first in infrastructure. RLAM declined to comment on whether this could be a prelude to further investments in the asset class, but said talks were at an early stage and no decisions were expected to be made in the near term.

Last October, PIP announced that it had reached the critical mass of ‘founding investors’ needed to move to the next stage of its development, which include agreeing on investment criteria, asset preferences and fee structures, as well as selecting a manager to run the platform.

PIP’s cornerstone investors include BAE Systems Pension Funds, BT Pension Scheme, London Pension Fund Authority, Lloyds TSB, Pension Protection Fund, The Railways Pension Scheme, Strathclyde Pension Fund, and West Midlands Pension Fund. These funds have committed £1 billion between them.

Last December, the industry body also confirmed it was in final discussions with Dalmore Capital to act as the manager of PIP’s equity mandate. “The PIP is working towards a first close with its founding investors. Discussions are ongoing with regard to an investment management role for Dalmore Capital,” Joanne Segars, chief executive of NAPF, commented then.

A spokeswoman for NAPF said no update had been given on the progress of the talks since the announcement.

PIP is an initiative launched by NAPF to attract pension investment into infrastructure on a low-cost basis. NAPF defines the vehicle as a “not-for-profit infrastructure fund, by pension funds and for pension funds”. Key features of its mandate will be low leverage, low fees and low risk, with a long-term cash return target of between 2 percent and 5 percent above inflation.