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Local authority pensions pledge £550m to infrastructure fund

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Local government pension pools are committing an extra £550m to a joint-venture infrastructure fund, furthering Westminster ambitions for more money for the asset class.

The Northern Pool and Local Pensions Partnership (LPP), two of the asset pools in the Local Government Pension Scheme (LGPS), said they would boost contributions to GLIL Infrastructure to over £1.8bn.

A joint venture by local government pension funds, GLIL targets core infrastructure projects mostly in the UK, and has already allocated nearly £900m to key investments covering greenfield sites, regulated utilities and transport upgrades.

The fund also holds minority stakes in Anglian Water, the Clyde windfarm project and social infrastructure company Semperian, the latter acquired in July for £106m.

The move follows encouragement in May from Rishi Sunak, the minister responsible for councils’ pensions investments, for the LGPS to put at least a tenth of its assets into infrastructure.

Ian Greenwood, chair of the Northern Pool, said: “GLIL already leads the way in meeting government ambitions for local authority pension funds investing in infrastructure projects.

“Now, by increasing our scale in this way, we not only are better able to work alongside some of the most sophisticated infrastructure investors in the world, we also have greater access to the widest pool of available investments at the best possible price.”

LGPS infrastructure investment was a motivation for the restructuring of the English and Welsh scheme into eight asset pools, which government believed would deliver necessary scale for such investment.

However, the government has since expressed ambivalence about this objective, a civil servant telling the LGC Pension Fund Symposium in July that return on investment remained the priority.

Alongside the extra funding, GLIL reiterated a desire for more investment partners than the two current pools and their associated funds.

The press release said GLIL expected “at least one new partner” and “a series of limited partners making smaller commitments” to join its investment committee, comprising the fund’s largest investors and making key decisions.

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