A platform to support pension funds’ investment in infrastructure projects has secured ten funds as founding investors, reaching £1 billion in investment capital.
The Pensions Infrastructure Platform’s (PIP) 10 investing funds are: British Airways Pension Scheme, BAE Systems Pension Funds, BT Pension Scheme, Lloyds TSB Group Pension Schemes, London Pension Fund Authority (LPFA), Pension Protection Fund (PPF), The Railways Pension Scheme, Strathclyde Pension Fund and West Midlands Pension Fund.
Each of the ten founding investors has made a soft commitment of £100 million to the PIP, subject to the development of the PIP being completed satisfactorily.
The PIP is on track to launch in the first half of 2013. It has a corporate administration structure in place, and PricewaterhouseCoopers (PWC) has been appointed to help select a manager to run the fund.
It is being developed for pension funds by pension funds, and aims to meet schemes’ demand for inflation-linked, long-term investments. It is expected to invest in core infrastructure, and in projects free of construction risk.The fund is seeking long-term cash returns of the retail prices index (RPI) plus 2% to 5%.
Eric Stobart, chairman of the investment and funding committee at the Lloyds TSB Group Pension Schemes, said: “We are pleased to have become a founding investor in the PIP and look forward to working with the other founders in developing the proposition.
“Infrastructure, when available in appropriate structures, should be an attractive asset class to UK pension schemes and the PIP should be an important step in making infrastructure more accessible.”
Edmund Truell, chairman of the LPFA, added: “The LPFA is committed to meeting its liabilities for the long-term benefit of pensioners, and the PIP helps achieve that.
“We are delighted to be able to support this initiative, while at the same time being confident that our funds will enjoy attractive, risk-mitigated returns.”
Conrad Williams, partner and lead on institutional investor investment in infrastructure at PWC, added: “We are delighted to be working with the PIP as it decides its strategy around fund management.
“Institutional investors are increasingly looking to invest in infrastructure and are keen to understand the merits of outsourced versus in-sourced investment.”
Speaking on behalf of the PIP, Joanne Segars, chief executive at the National Association of Pension Funds, said: “We have made excellent progress to secure £1 billion in just over a year.
“Infrastructure projects can be a very good match for pension fund liabilities, but so far UK pension funds have struggled to explore this asset class. This new platform will make it much easier for them to do so.”