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UK pensions platform to launch £250m solar fund(1)

The Pensions Infrastructure Platform’s new vehicle will be managed by Aviva Investors and has a lifespan of 25 years.

The UK’s Pensions Infrastructure Platform (PIP) plans to start fundraising on a new £250 million (€342 million; $387 million) solar vehicle next month, according to sister title Low Carbon Energy Investor.  

The fund will focus on small-scale rooftop solar in both the residential and commercial sectors, said PIP chief executive Mike Weston.

It will be run in partnership with Aviva Investors, which has over £350 million invested in solar, and aims to reach a first close during the second quarter of the year, according to a spokeswoman.

The 25-year fund will make minimum unleveraged investments of £1 million and aims to generate a yield of 4 percent above inflation. The fund will charge investors 100 basis points in fees during the investment period and 42.5 basis points thereafter. Its target investments will qualify for government feed-in tariffs, providing long-term visibility on the price of the electricity the projects will sell to the grid.

PIP’s solar fund will follow on from its PPP Equity PIP vehicle, which is managed by London-based Dalmore Capital, having raised £330 million of its £500 million target from PIP’s founding investors.

The PIP, which is an initiative launched by the National Association of Pension Funds (NAPF), counts a number of founding investors including British Airways Pensions, Lloyds TSB pension schemes, the Pension Protection Fund, Railpen, Strathclyde Pension Fund and the West Midlands Pension Fund. Its ambition is to achieve an eventual size of £2 billion, a target that it hopes to reach by enlisting smaller UK pensions that would join on the same terms as its early backers.

NAPF represents more than 1,300 pension funds that hold total assets worth £900 billion.