The UK Pensions Infrastructure Platform (PiP) will soon launch its first internally managed fund.
Mike Weston, chief executive of the venture launched by the UK’s Pensions and Lifetime Savings Association, said the fund would look to collaborate rather than compete with other asset owners as its investment director, Ed Wilson, identified investment opportunities.
Wilson will oversee the PiP’s first in-house fund, which Weston hopes the Financial Conduct Authority will approve in time for launch by early 2016.
While Wilson will be able to grow in-house investment staff, Weston said the PiP would never have a “massive” team behind it.
“The ambition for the fund is that it is a multi-strategy fund,” he said.
“[It will be] multi-strategy on the basis of investing across all the sub-sectors of UK infrastructure and across the capital structure – so debt and equity.”
Weston said the fund, which aims to raise £1bn (€1.3bn), will act as a “one-stop shop” for pension investors seeking core UK infrastructure, targeting returns of 2-5% in excess of the retail prices index.
To achieve a diversified portfolio for the fund, Wilson will be tasked with identifying 15-20 assets, Weston predicted, without ruling out sizeable commitments of up to £100m.
Weston, appointed chief executive in September last year, was hired to ensure the venture could be more than a fund-of-funds coordinator to funnel the UK Treasury’s desired £20bn in pension assets towards infrastructure projects.
Citing the UK government’s plan to pool the assets of local authority pension schemes in England and Wales into six vehicles, Weston said he feared the pools could end up competing against each other for the same assets, driving up prices.
“It will do no good to anybody,” he said. “It doesn’t benefit pensioners at the end of the day if we are sitting down and competing with other pension schemes.”
A separate PiP fund is investing in solar power, managed by Aviva Investors.
Founding investors and new pension funds also backed the £4.2bn Thames Tideway Tunnel project, with £370m in collaboration with Dalmore.
To date, the PiP can take credit for helping direct £1bn in capital towards both Aviva and Dalmore, and founding investors PPF and British Airways have participated in all three of the ventures.
Renewable energy is also of interest, Weston said, while the PiP is looking at both onshore and offshore wind.