Swiss pensions platform pays €240m for first asset

IST3, whose backers include nine of the country’s pensions, is planning to hold a second close by end of Q2 2015.

IST3 Infrastructure Global (IST3) has plugged CHF288 million (€240 million; $282 million) in Swissgrid, Switzerland’s only ultra-high-voltage transmission system operator.

The evergreen investment vehicle, set up in 2013 by the not-for-profit IST Investment Foundation (IST), will now own 49.9 percent of a subsidiary created by Alpiq, into which the power company will contribute its Swissgrid shareholdings as well as 49.9 percent of its shareholder loan to Swissgrid.

“IST3 pursues a conservative and cash-yield focused investment strategy. The investment in Swissgrid combines the long-term investment horizon of infrastructure investments with the long-term investment horizon of Swiss pension funds,” said B Capital, IST3’s investment advisor, in a statement.

The transaction, still subject to approval by Swissgrid’s board, is the first by IST3. The fund held its debut closing at the end of June on CHF298 million.

Infrastructure Investor reported last summer that the platform was hoping to add between CHF100 million and CHF200 million through a second closing by March 2015, followed by a third close by the end of June next year.

Stephan Schmidweber, a deputy director at IST, told Infrastructure Investor that the fund still hoped to reach a second close by end of Q2 2015.

The fund’s initial investors include pensions for Migros and Manor, two Swiss retailers, as well as funds for pharmaceuticals group Roche, for the Swiss energy sector, and for the canton of Luzerne. All except Roche are also represented on the vehicle’s board of trustees.

IST3 primarily focused on brownfield, cash-yielding assets, with the objective to deliver a 4 to 6 percent current yield and an internal rate of return (IRR) of between 7.5 and 8.5 percent.