West Midlands, Strathclyde back PiP direct infrastructure fund

West Midlands and Strathclyde are among investors in a new £1bn (€1.3bn) direct infrastructure fund launched by the UK’s Pensions Infrastructure Platform (PiP).

The local government pension schemes joined the Pension Protection fund and RPMI Railpen as founding investors in the PiP’s Multi-Strategy Infrastructure fund.

Geik Drever, strategic director of pensions at West Midlands pension fund, said there was a “huge opportunity in UK infrastructure at the moment”.

“We helped establish the PiP because we believe there’s room in the market for a transparent platform where pension funds can invest together at scale to make the most of this opportunity,” Drever said.

“The PiP Multi-Strategy Infrastructure fund opens the door to this opportunity for pension funds of all sizes.”

Bailie Philip Braat, chair of Strathclyde pension fund, said infrastructure projects were attractive for Strathclyde as long-term, low-risk investments.

“Our members are also positive about seeing their savings supporting jobs and communities,” Braat said.

“However, until the PiP was established, the market was really geared towards short-term investors.

“We have more control now, so we have access to opportunities tailored to the specific needs of a pension fund.”

The PiP’s fund will invest directly in UK infrastructure and offer a co-investment programme for larger investors seeking benefits of scale.

The fund will have a minimum commitment size and focus on core UK infrastructure, targeting transportation, renewable energy, utilities, communications, housing and social infrastructure, and have a long-term buy-and-hold investment strategy to generate low-risk, inflation-linked cash flows.

Mike Weston, chief executive of the PiP, which is aiming to invest at least £2bn in UK infrastructure, said the launch of the fund was further proof investors believed the PiP worked and was “delivering on its promise”.

With the support of founding Investors, the PiP, Weston said, has mobilised £1bn for investment in UK infrastructure.

Strathclyde made a £50m commitment to the first in-house fund managed by PiP, of which Strathclyde is also a founding investor. 

The £50m allocation to the PiP Multi-Strategy Infrastructure Fund is in line with the local authority scheme’s initial £100m commitment to the PiP.  

However, because the £100m formed part of Strathclyde’s Direct Investment Portfolio, which has grown to 5% of total fund assets since the initial soft commitment in 2012, the fund said it decided to boost its total PiP commitment to £120m.

The PiP has previously launched two externally managed funds – a PPP Equity vehicle managed by Dalmore Capital and a solar fund managed by Aviva Investors.