Strathclyde ploughs $670m into JPMorgan infra fund

The single commitment to the IIF was preferred to an investment in IFM, concluding the UK pension’s search for an open-ended global infrastructure vehicle.

The UK’s Strathclyde Pension Fund has made its largest ever infrastructure investment, ploughing £500 million ($670.3 million; €571.9 million) into JPMorgan’s Infrastructure Investments Fund.

The move forms part of the pension scheme’s bid to diversify its infrastructure investments away from the UK, plans for which it announced in March when it said it would be seeking to invest in open-ended infrastructure fund managers with a global mandate.

Strathclyde has eventually settled on a large investment in one manager after it was presented by consultants Hymans Robertson with a choice between JPMorgan and IFM’s Global Infrastructure Fund, according to documents from the pension released yesterday. The pension board said the JPMorgan fund would offer faster deployment and better diversification than the IFM vehicle.

The fund has made 17 platform investments since it was formed in 2007, most recently with the formation of Ventient Energy in November in the UK, a portfolio comprising 34 wind farms with an installed capacity of 690MW. It aims to split investments equally between North America and Europe, while also reserving up to 20 percent of the portfolio for other OECD countries.

The IIF was valued at $6.1 billion, as at the end of March last year, according to the City of Fresno Retirement System. It targets returns between 8 percent and 12 percent and had generated a return of 6.9 percent over the five years preceding last year.

In addition to the investment in the IIF, Strathclyde also committed £50 million to Equitix’s fifth fund, following the close of the UK-based fund manager’s fourth vehicle in July last year on its hard-cap of £750 million. The latest fund is targeting £750 million with a £1 billion hard-cap and returns of between 7 percent and 10 percent. Strathclyde’s investment in Equitix Fund V is £20 million more than the pension scheme committed to Fund IV and also at a far earlier stage of the fundraising. When Strathclyde invested in fund IV, Equitix had already raised £430 million.

The latest fund is at the earlier stages of fundraising, with Equitix counting Pantheon and the Willis Towers Watson corporate pension scheme as potential investors, according to Strathclyde, in addition to other local authority pension funds, sovereign wealth funds and insurance companies. Equitix is said to have £1.4bn of investment opportunities in the pipeline, with the expectation of winning one in three.

Strathclyde has also become the first local government pension scheme to commit to Greencoat Solar II, the UK solar fund managed by Greencoat Capital. Strathclyde said the vehicle reached a third close on £517 million in March and that its £50 million investment is part of a £300 million proposed interest from other investors.

Strathclyde could not be reached for comment at the time of publication.