The infrastructure joint venture between the Greater Manchester Pension Fund and the London Pensions Fund Authority (LPFA) has made its first investment, a biomass plant in the south of England.

The £500m (€654m) vehicle, launched in January, confirmed the £9m investment in the Leeming Biomass plant, and said a total of £60m had been committed to renewable energy projects.

In a statement, Greater Manchester & London Infrastructure Limited said the commitment would go toward the funding and construction of renewable projects.

Chris Rule, CIO at the LPFA, said both funds would be willing to take on construction risk.

“We are building a diversified portfolio of operational and greenfield assets and are delighted to make this first investment, which will provide equity capital for the development of essential new-build energy infrastructure in the UK,” he said. 

Iona Capital, a fund manager focused on equity and debt investments in the bioenergy sector, has been hired to source and manage up to 10 projects that will form the £60m portfolio.

Paddy Dowdall, assistant executive director at the LPFA, praised Iona’s strong track record.

The company has to date invested £225m in more than a dozen biomass projects in the UK.

“They were obvious partners, and we are excited by the pipeline of potential investments,” Dowdall said.

“We have underwritten this investment with a double-digit return and an expectation of early cash flows – attractive characteristics for our portfolio.”

Kieran Quinn, chairman at the GMPF, said he was delighted the joint venture had completed its first investment.

“The capital we have allocated will allow both funds to increase investment in UK infrastructure while at the same time delivering the societal benefit of developing renewable energy projects across the country, including the North West,” he said. 

The venture aims to be fully invested in two years, requiring it to deploy a further £440m.