UK pensions industry creates multi-strategy infrastructure fund

CraneThe Pensions Infrastructure Platform (Pip), which the UK pensions industry created in 2012 to overcome difficulties with the asset class, is to target housing and other significant building projects with the latest phase of its roll out.

The organisation has launched the Pip Multi-Strategy Infrastructure Fund with a target size of £1 billion (€1.3 billion) – a figure equal to half of Pip’s overall target asset size.

A minimum commitment size of £1 million means that smaller schemes can also participate and share the same terms with all other investors. Finding ways for smaller schemes to invest in infrastructure is a key aim of the body, which is authorised by the UK regulator.

Transportation, renewable energy, communications, utilities, as well as housing, are all targeted by the fund. The investors could achieve their preferred investment exposure through a co-investment programme and the fund’s sub-portfolios, which have different risk/return characteristics.

Bailie Philip Braat, chair of the Strathclyde Pension Fund, said: “Infrastructure projects are attractive for Strathclyde as long-term, low-risk investments – and our members are also positive about seeing their savings supporting jobs and communities.

“However, until Pip was established, the market was really geared towards short-term investors. We have more control now, so we have access to opportunities that are tailored to the specific needs of a pension fund.”

Geik Drever, strategic director of pensions at the West Midlands Pension Fund, said: “The Pip Multi-Strategy Infrastructure Fund opens the door to this opportunity for pension funds of all sizes.”

Pip focuses on low-risk infrastructure assets and aims to deliver long-term index-linked cash flows of 0-2% above the Retail Price Index (RPI) and RPI +2-5% to suit different investment strategies of individual pension schemes.

Fees of about 50 basis points “reflect the true cost of operation”.

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