The Royal County of Berkshire Pension Fund is taking a stake in asset manager Gresham House and backing the firm’s British Strategic Investment Fund (BSIF).
The pension fund is taking a 20% stake in the asset manager and providing cornerstone investment for the fund, which will focus on renewable infrastructure, housing and innovation.
John Lenton, chairman of Berkshire Pension Fund and Pension Fund Advisory Panels, said the investment in the platform will enable it to reduce costs and obtain diversity in investments.
Lenton said the pension fund will target niche areas and smaller and longer-term investments “than those that interest the major investment houses”.
“These give us the potential of a higher long-term return which is so important to a pension fund like ours which has to plan for pensions that will be drawn down many years in the future,” he said.
Gresham House hopes to raise £300m (€353m) for BSIF, which is focusing on the three themes identified by the UK Chancellor in the 2016 Autumn Statement as being of strategic importance to the UK.
The platform is intended to provide investors with access to illiquid alternative investments in niche asset classes that are often “overlooked” and difficult to access by larger funds.
“For example, it becomes uneconomical for £25bn pension “super-pools” to monitor and manage sub-£50m investments,” the asset manager said.
The platform is aimed at local government pension schemes (LGPS) like Berkshire, private-sector pension funds, endowments, family offices and other investors.
“Initial discussions with a limited number of LGPS have confirmed interest in the objectives of the new Gresham House platform,” said the asset manager.
The forthcoming launch of the platform comes as the UK LGPS are pooling assets to create larger funds capable of benefitting from economies of scale and, as desired by the government, investing in infrastructure.
Tony Dalwood, chief executive of Gresham House, said the announcement “represents a further significant step in delivering the growth strategy that we set out when repositioning the group two years ago”.
The asset manager’s board has identified alternative asset management seeking superior investment returns as “a structural growth area”, it said in a statement.
Berkshire’s acquisition of the 20% stake is subject to a vote at a general meeting on 10 March.