UK pension alliance targets double digits on debut deal

Greater Manchester & London Infrastructure Limited, a £500m platform teaming GMPF with LPFA, has allocated £60m to invest in domestic bioenergy projects.

A joint venture between Greater Manchester Pensions Fund (GMPF) and the London Pensions Fund Authority (LPFA) has pledged £60 million (€82 million; $93 million) towards the construction and operation of UK renewable energy assets.

The investment is the first by Greater Manchester & London Infrastructure Limited (GLIL) since the platform was created last January with an initial firepower of £500 million. About £9 million will be immediately deployed to fund Leeming Biogas, a biomass plant located in North Yorkshire.

“We have underwritten this investment with a double-digit return and an expectation of early cash flows,” said Paddy Dowdall, assistant executive director at GMPF, in a statement.

Set to process an average of 80,000 tonnes of local food waste each year, Leeming Biogas is expected to become one of the largest gas-to-grid anaerobic digestion plants in the UK. Several more projects, already in the pipeline, are due to follow suit, GMPF and LPFA said in a statement.

The remainder of the £60 million capital earmarked so far will go towards funding five to 10 UK bioenergy infrastructure projects from planning consent through construction, with the intent to hold the completed assets through their economic life.

Iona Capital, a London-based renewables asset manager, will be responsible for sourcing and managing individual projects. These will form part of GLIL’s portfolio as it targets both capital appreciation and inflation-linked cash flows through investments in operational and greenfield assets, the pensions said.

The platform is currently reviewing several other UK infrastructure opportunities with further capital deployment anticipated in the coming weeks, they added, noting that they intended to deploy their joint £500 million initial pool over the next two years.