Legal & General is teaming up with Patron Capital to target less mainstream property sectors.
The two companies said they agreed to the long-term strategy of investing in assets with a “positive social impact”.
The Perpetual Opportunities Partnership (POP) will initially focus on the UK and Ireland, with deals likely to be between £20m (€25m) and £200m in size.
Legal & General Capital’s managing director Paul Stanworth said the initiative would “significantly expand” its pipeline of opportunities into “less congested areas of the market”.
The partners said they would look for long-term, operational real-estate and infrastructure-backed investment opportunities with a positive social impact.
Patron Capital will be the primary originator and day-to-day investment manager, the companies said.
Legal & General said the link-up supported its strategy of being more involved in UK housing and infrastructure, aiming to provide long-term capital to the energy, housing, urban regeneration and alternative financing sectors.
Investments would be made by Legal & General Capital and Patron Capital as co-investors, but Legal & General Capital will be the majority stakeholder.
They said POP would have a perpetual life cycle, investing over the medium to long term.
“By taking a flexible, strategic approach to investing in housing and social infrastructure, we will not only offer our shareholders attractive risk-adjusted returns but also drive UK economic growth and contribute in a significant way to enhancing UK living standards,” Stanworth said.
In March, L&G invested £252m in UK affordable housing – the largest direct investment by an institutional investor at that point – buying a 4,000-unit portfolio let to Places for People Homes.
Keith Breslauer, Patron Capital’s managing director, said the tie-up with L&G would allow the company to look at longer-term investments lower on the risk-reward spectrum.
This, he said, meant it would be able to act on more of the €9bn investment pipeline it reviews each year, he said.