Gresham House has raised £150m (€171m) in the first close of its flagship British Strategic Investment Fund (BSIF).
The fund has been backed by UK local government pension schemes (LGPS), including the Berkshire Pension Fund and another unnamed LGPS fund, according to a statement from the specialist asset manager.
Berkshire bought a stake in Gresham House itself earlier this year.
The company said in a statement: “BSIF will bridge the gap between the limited partners’ investment goals and the need for longer-term investment into key UK sectors, while aiming to deliver a positive social impact.
“Investors will benefit from enhanced due diligence, transparency, and corporate governance in line with best practice. Importantly, the fund will focus on the extensive universe of potential investments below a £50m threshold size and will involve development finance alongside established ‘brownfield’ investments.”
The BSIF targets “relatively illiquid” sub-£50m investments in UK housing and infrastructure, with the first investments sourced from the company’s existing pipeline of transactions, the company said.
The fund is aimed at pension funds, endowments and family offices. It is a closed-end Guernsey Limited Partnership structure with a 12-year life, and it offers investors the opportunity to co-invest in assets.
The BSIF is targeting a net total return of 8-10% a year, including a yield of 3-5%. The fund’s final close is scheduled for the second half of next year.
The fund’s investment committee, which will oversee asset allocation, includes Peter Moon, former CIO of the Universities Superannuation Scheme, and Gary Steinberg, former CIO of the International Monetary Fund and the Wellcome Trust.
The BSIF is the first fund to be launched on Gresham House’s Long Term Investment Solutions Platform, launched at the same time as Berkshire’s investment in the company.
Tony Dalwood, CEO of Gresham House, said: “We are encouraged by the significant level of interest from the test marketing with investors in the first fund on our new platform and aim to support the UK economy’s need for patient capital to invest into economically attractive and socially beneficial sectors while targeting both financial and non-financial returns for those investors.
“We have chosen to initially target the UK housing and infrastructure sectors, which are viewed as strategically important for regional economies. Many opportunities benefit from substantial asset-backing and/or long-term contractual revenues, which adds attractive income-generating characteristics.”
Last month, in a separate transaction, Gresham House bought Hazel Capital, a group specialising in renewable energy.