Border to Coast announces £1.4bn infrastructure investment

Border to Coast Pensions Partnership (“Border to Coast”), has secured £1.4bn of commitments to infrastructure investment as it continues to develop new opportunities for its eleven local government pension schemes, which collectively have assets of c.£46bn.  Increased investment in infrastructure was one of the original objectives of pooling.

Border to Coast has deployed £675m of infrastructure investments from its first offering (Series 1A) in line with expected timescales. The portfolio consists of eight investments with high quality managers providing exposure to Border to Coast’s targeted infrastructure themes including Energy Transition, Digital Revolution, Operational Value Add, Greenfield and Emerging Markets.

Border to Coast has secured a further £760 million of commitments from its Partner Funds to its second infrastructure offering (Series 1B). These commitments are to be deployed in the period to 31 March 2021 as part of a programme to build a diversified global infrastructure portfolio over the long-term across Core, Core+ and Value Add/Opportunistic strategies.

Border to Coast Chief Investment Officer, Daniel Booth said:

“Infrastructure was identified as a key asset class for our Partner Funds as they seek new investment opportunities and better diversification of risk.  Thanks to our collective size we have been able to access high quality investment opportunities whilst generating significant collective fee savings for our investors over the long term. We appreciate the trust that our Partner Funds have placed in us as shown by the substantial commitments they have made to Infrastructure.”

The Border to Coast Private Markets structure was originally launched in May 2019 to deliver key benefits of pooling for its LGPS Partner Funds. This includes economies of scale, increased resources for due diligence, reduced costs and access to a wider range of investments including co-investments.  The aim is to enhance risk-adjusted, net of fees, returns from Private Market investments over the long term.

Border to Coast has achieved significant cost savings on behalf of its investors through scale, early engagement with managers and collaboration with other like-minded investors.  In addition, we anticipate access to a significant number of co-investment opportunities as a result of these investments, which could result in additional cost savings.

Series 1A infrastructure investments

Border to Coast Partner Funds choose on an annual basis the level of their investment in private market asset classes. Ten of our eleven Partner Funds invested in Series 1A (Bedfordshire, Cumbria, Durham, East Riding, North Yorkshire, Surrey, South Yorkshire, Teesside, Tyne and Wear and Warwickshire).

Investments are selected using a robust investment process focusing on investment and operational due diligence. This process is undertaken by the internal Border to Coast team supported by third party service providers.  Responsible investment is incorporated into the investment process both in terms of identifying investment opportunities as well as assessing a manager’s approach to incorporating these principles into their operations and the operations of the companies or assets in which they invest.

The eight investments in Series 1A are:

  • Brookfield Infrastructure Fund IV – $125 million

Brookfield is one of the largest specialist investors in infrastructure on a global basis across a broad range of sectors including transportation, utilities, renewable power, energy and data.

  • Global Infrastructure Partners Fund IV – $60 million

GIP is a dedicated infrastructure manager with deep industry expertise and strong operational management investing in high quality assets in the energy, transport, and water and waste sectors.

  • AMP Global Infrastructure Fund II – $100 million

AMP is an established global infrastructure manager with an experienced and well-resourced team and a strong long-term track record. This fund will have a Core / Core+ approach with a focus on Transport, Energy and Utilities, Communications and Healthcare.

  • Infracapital Greenfield Partners Fund II – £100 million

Infracapital is a European-focused infrastructure manager with a focus on Utilities, Transport, Communications and Renewables. This fund has a Core+ approach and includes greenfield investments.

  • Arcus European Infrastructure Fund II – €90 million

Arcus is an experienced and well-resourced European-focused manager with strong operational capabilities. Arcus has been successful in identifying niche or immature sub-sectors which become more mainstream over time. This fund has a Core+ / Value Add approach with a focus on Transport, Telecommunications and Energy.

  • iCON Infrastructure Partners V – $100 million

iCON is an established global infrastructure manager with a well-resourced team, strong origination capability and a strong long-term track record. This fund has a Core / Core+ approach with a primary focus on Europe across Facilities, Transport and Power and Utilities.

  • Macquarie GIG Renewable Fund II – €101 million

Macquarie is a large global infrastructure manager with an experienced and well-resourced team with strong ESG credentials. This fund is a dedicated global renewables strategy targeting a mix of greenfield and brownfield assets primarily focused on offshore and onshore wind in Western Europe.

  • Stonepeak Global Renewables Fund – $100 million

Stonepeak is a large global infrastructure manager with a strong long-term track record. This fund is a dedicated global renewables strategy targeting a mix of greenfield and brownfield assets primarily focused on the solar, wind, hydro and energy storage sectors in North America and Developed Asia.