GLOBAL – The City of London is set to grow its infrastructure exposure, awarding Australia’s IFM a £45m (€53m) mandate to be split between the £720m local authority’s pension fund and a maintenance trust.
IFM, jointly owned by 30 Australian Superannuation funds, will invest the mandate in core equity infrastructure holdings on behalf of both the pension fund and the local authority’s £470m Bridge House Estates, used to pay for the maintenance of local bridges.
They previously won a £35m mandate from the Leicestershire County Council Pension Fund.
Paul Mathews, corporate treasurer at the City of London Corporation, welcomed the ability to invest in a pre-existing portfolio of cash-generating assets based partially in the UK.
“Infrastructure is an increasingly important asset class in portfolios, with its attributes for matching long-term liabilities particularly compelling,” he added.
The £45m mandate will see a significant increase in the City of London Corporation Pension Fund’s infrastructure exposure.
According to its 2011-12 annual report, it had combined private equity and infrastructure holdings of only £8.6m at the end of March last year, accounting for just over 1% of the fund’s £614m total portfolio.
Annabel Wiscarson, executive director for business development at IFM Investors, said the firm would remain focused on European and North American projects.
She also said she viewed the establishment of the Pensions Infrastructure Platform, the vehicle under development by the National Association of Pension Funds (NAPF) and Pension Protection Fund (PPF), as “complementary” to the approach taken by IFM.
“Obviously, we’ve known about the PIP now for a year and a half or so, and all we keep seeing is them having a very similar philosophy to us – long-term ownership of infrastructure, conservative gearing,” she told IPE.
“So, if anything, we are very happy to align ourselves with the PIP because it’s exactly how we started and how we continue to invest in infrastructure. We’ll be complementary with them.”
PPF chief executive Alan Rubenstein recently said the PIP’s founding investors had shown a “willingness”, and the NAPF’s head Joanne Segars said she expected the fund to launch by the end of the year.