Gresham House has secured £100m in commitments from two UK local authority pension funds for the first close of its £500m (€587m) British Sustainable Infrastructure Fund II (BSIF) strategy.
The commitments came from Worcestershire Pension Fund and Teesside Pension Fund, who are one of six UK local government pension scheme limited partners (LPs) in BSIF I.
BSIF reached its fundraise capacity of £300m last year, including one UK treasury, and the first close of BSIF II was exclusively reserved for existing LPs.
Gresham House said it planned to pursue subsequent closes with remaining existing LPs alongside a wider group of UK and overseas LPs later this year and early next year.
The asset manager said the investment platforms of the first BSIF strategy “now provide BSIF II with well over £1.3bn of identified sustainable infrastructure pipeline”.
“BSIF II will for the first time have the potential to follow its investments outside of the UK to support their strategic global growth,” it added.
The closed-ended strategy has a 12-year time horizon and targets an annual net return of 8-10%, including a target income yield of 5% per annum. It focuses on six sub-sectors: resource efficiency; digital inclusion; waste solutions; regeneration; decarbonisation; and health and education.
Heather Fleming, managing director of institutional business at Gresham House, said BSIF II’s focus on the less competed sub-£50m part of the market “provides differentiation coupled with our ability to offer LPs co-investment opportunities in their areas of specific interest”.
Councillor David Coupe, chair of the Teesside Pension Fund, said the pension fund viewed the allocation as complementary to its core infrastructure exposure and was “pleased to be offered the flexibility to co-invest in locally-based opportunities as they arise”.
Elizabeth Eyre, chair of the Worcestershire Pension Fund committee, said: “Following our previous investment, this latest commitment to BSIF II adds to our alternatives exposure at a time when securing diversified income streams is increasingly important.
“We recognise the importance of a strategy that also aligns with our environmental, social and governance values.”
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