Strathclyde commits £130m in infra spending spree

The British pension fund has backed new vehicles managed by Temporis and Resonance, as well as increasing its allocation to existing investment in PIP.

UK-based Strathclyde Pension Fund has revealed £130 million ($176.3 million; €147 million) in new infrastructure commitments to three different funds following a meeting earlier this month.

The largest of the Scottish pension scheme’s investments was an £80 million pledge to the Multi-Strategy Infrastructure Fund, managed by the Pensions Infrastructure Platform, of which Strathclyde is a founding member. The move adds to the £50 million that Strathclyde has previously directed towards the fund.

The MSIF initially launched last year, with a target size of £1 billion to provide PIP’s members – also including Railpen, the West Midlands Pension Fund, British Airways Pensions, Lloyds TSB pension and the Pension Protection Fund – with a degree of alignment and transparency “not available elsewhere in the market today”.

However, it was revealed earlier this year a series of strategy changes led to the fund being downsized to £600 million. The Strathclyde scheme says MSIF has total commitments of £175m from four pension funds before its latest investment. The additional funding of MSIF comes ahead of a proposed off-market acquisition of several assets by the fund, which is seeking a net IRR of 6 percent.

Strathclyde has also injected £30 million into a new offering from investment manager Temporis Capital. The renewable energy investor has launched its latest offering – Temporis Operating Renewable Energy Strategy LP – to invest in UK-based wind and solar projects post-construction and in the early operational stages. The 12- to 15-year fund has a target of £200 million and a hard-cap of £250 million, seeking a net IRR of 8.5 percent to 9 percent.

Temporis is looking to acquire assets between 5MW and 20MW and is currently analysing a 270MW pipeline, according to Strathclyde. It has allocated up to 20 percent of the fund to be invested in the EU away from the UK, with such investments likely to occur in Ireland where Temporis has previous experience.

The new fund is seen as a successor to Temporis Renewable Energy, a vehicle to which Strathclyde’s £30 million commitment in 2015 accounted for nearly half of the fund’s total £65 million size. It has made three wind investments and is set to complete a fourth in May next year.

Strathclyde’s smallest infrastructure investment of the latest round is a £20 million outlay in a fund managed by Resonance Asset Management, an investor affiliated with Fidante Partners. The firm has launched Resonance British Wind Energy Income II, a follow-up vehicle to its $100 million, 2013-vintage.

The latest effort will target £150 million, with a hard-cap of £200 million and gross returns of 7 percent to 8 percent. The fund will look to acquire operational onshore wind farms with capacity of 5MW or below, an asset size now widely built as a result of policy changes by the UK government. The 10-year fund will be seeded with a £47 million acquisition of 14 assets, according to Strathclyde.