UK - The Lancashire County Council Pension Fund is considering investing around £80m (€89.55m) in infrastructure as part of a new strategy to diversify its investments.
The £3.2bn pension fund has gone out to tender to find an infrastructure manager to invest approximately 4% of the fund, in a bid to vary the portfolio and secure relatively stable returns in the future.
The pension fund's investment panel announced in June 2008 it would consider more alternative investments including infrastructure, private equity and global tactical asset allocation and recommended increasing the allocation to infrastructure by 3-5%.
The pension fund will use approximately £310m of funding put aside from a search for a global enhanced equities manager which was cancelled in November 2008. Legal & General Investment Management is currently managing the funds in a global equity fund.
Global consultants firm Mercer is currently advising the Lancashire County Council Pension Fund on the recruitment process and a decision is due to be reached later this year.
Only last month, the Royal County of Berkshire Pension Fund announced it had invested £14.5m in an indirect real estate mandate with Mayfair Capital Investment Management Limited, to help diversify its UK exposure.
The pension fund invested in the MC Income Plus fund by issuing units rather than cash (an ‘in specie transfer') and has become the largest investor in the fund, which is valued at approximately £35m and has 15 properties in its portfolio.
As part of the contract, the Royal County of Berkshire Pension Fund will be represented at a new Investors' Committee that will hold a strategic overview and approve transaction activity for the fund.
The properties included in the transfer include a warehouse in Cannock and offices in Winchester and Uxbridge.
The fund was launched in 2004 and had an intended life of 5-7 years, however Mayfair Capital has decided to make the fund open-ended.
It still aims to achieve an absolute annual return of 9% and the current overall yield on the portfolio is around 8%.
Guy Brogden, investment director at Mayfair Capital, said: "Given the current economic situation and very low interest rate environment, we expect commercial property to become attractive again to pension investors for its relatively high income yield. We are therefore confident we can grow the Fund through attracting new equity or indeed further properties by ‘in specie transfer'."
Mayfair Capital is in the process of promoting the fund to attract more investors.
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