Cornwall Pension Fund and Bedfordshire Pension Fund are among eight UK local government pension schemes (LGPS) that have backed Gresham House to raise £450m (€517m) to invest in sustainable infrastructure.

Gresham House said its British Sustainable Infrastructure Fund (BSIF) II and its side-car vehicles closed after receiving capital commitments from 12 investors, including Worcestershire Pension Fund, Teesside Pension Fund, Staffordshire Pension Fund, Greater Manchester Pension Fund, Torfaen Pension Fund and East Riding Pension Fund and four family offices.

The fund’s predecessor, which was also backed by LGPS capital and closed with £300m worth of capital commitments in 2020, had recorded a net internal rate of return of 16.2% as of the first half of 2023, above its stated target of 8-10%, according to Gresham House.

With more than £2bn of controlled pipeline within the portfolio, the £450m raised will be “deployed into existing BSIF platforms to deliver the strongest financial impact”, while supporting the evolution of a range of sustainability solutions across the UK, Gresham House said.

Heather Fleming, managing director of institutional business at Gresham House, said: “Investors are looking for innovative investment opportunities that support regional levelling up and the green agenda in the UK. We are delighted that our 12 investors see BSIF II as an opportunity to drive a positive impact.

“We are giving LPs [limited partners] a platform for place-based investment, providing exposure to our portfolio companies and supporting the regions and sectors that most align with their sustainability targets. We are proud to empower LGPS investors to make sustainable investments that level up their region while delivering a strong return on investments.” 

Councillor Jayne Kirkham, pensions committee chair at Cornwall Pension Fund, said: “It is important to our members that their money is invested responsibly and sustainably. By partnering with Gresham House, the pension fund is supporting critical local infrastructure projects, boosting digital connectivity on our doorstep here in Cornwall, alongside other innovative solutions to environmental and social challenges across the UK.”

Peter Bachmann and Simon Adcock, co-fund managers of the BSIF strategies, said: “We are very pleased to have welcomed eight new LPs to BSIF II, and believe our focus on impact-driving returns will perform well financially whilst capturing the attention of forward-thinking real asset investors.  BSIF II is the next step for our platform, which we look forward to continuing to scale with future funds.

“With portfolio companies delivering ground-breaking infrastructure solutions across UK regions including gigabit-capable broadband connectivity in Cornwall, innovative waste recycling solutions in the North East and vertical farming in Staffordshire and East Anglia, LGPS and other investors are attracted to the impact their investment can deliver for their communities.”

To read the latest IPE Real Assets magazine click here.