The Scottish pension fund is recommending that its investment committee begin seeking managers and funds with an overseas or global infrastructure mandate. It says it will initially look for open-ended pooled funds given their ability to deploy more quickly and provide a level of liquidity. However, it expects this strategy to evolve to closed-ended funds and those with a more specific focus on individual market segments.
The local authority scheme is not new to the asset class. It is one of the largest pension funds investing in infrastructure in the UK, having agreed to 17 infrastructure fund investments with a total commitment value of about £600 million ($832.5 million; €672.7 million) to date.
These all sit in Strathclyde’s Direct Investment Portfolio, for which infrastructure and renewables account for more than 60 percent of the investments. However, barring isolated Italian investments made from Equitix Fund IV and Irish wind farms in the NTR portfolio, the DIP is comprised of UK-based assets and accounts for 2.8 percent of the pension fund’s investments. DIP also contains assets in the property, credit, growth capital and venture capital sectors.
The new infrastructure allocation is expected to account for 2.5 percent of the entire Strathclyde portfolio, which currently totals £21.2 billion, and will largely cover the global investments. A spokeswoman for the pension fund confirmed to Infrastructure Investor that all infrastructure assets within the DIP will stay in the portfolio, but declined to comment further on the move towards global infrastructure investment.
Strathclyde’s most recent additions to its infrastructure base came in December when it provided £50 million each to Hermes Infrastructure Fund II and Dalmore Capital 3. Its largest proposed infrastructure investment came in September when it provided a further £80 million to the Pensions Infrastructure Platform Multi-Strategy Infrastructure Fund, bringing its total commitment to the vehicle to £130 million.