BORDER TO COAST COMMITS A FURTHER £1.2BN TO PRIVATE MARKET INVESTMENTS

Border to Coast Pensions Partnership, one of the UK’s largest public sector pension pools, has committed a further £1.2bn to private markets as it continues to deliver new investment opportunities for its 11 local government Partner Funds.

The investments form part of the £2.7bn private markets programme announced in July 2021 and have been deployed across a range of new infrastructure, private equity, and private credit funds.

Mark Lyon, Head of Internal Management, said: “We continue to build portfolios that are diversified across strategies, geographies, sectors and size. Particular focus has been given to building strong, long-term relationships with managers. The portfolio incorporates a strong mix of high-quality established managers that can often be difficult to access, alongside sector specialists with deep expertise and emerging managers with differentiated offerings.

“Wherever possible, we’ve sought to lower fees and drive value for money for our Partner Funds through our scale, early engagement, co-investments and being considered a long-term partner. Investing in private markets is an effective way for our Partner Funds to diversify their investments, generate stable cash flows, and benefit from long-term capital growth.”

The investments include £593m to four infrastructure funds, £426m to four private equity funds, and £148m to one private credit fund.

First launched in May 2019, Border to Coast’s private markets programme is designed to offer its LGPS Partner Funds access to a wider range of investments, including co-investments, with the aim of providing enhanced, diversified, risk-adjusted returns. Investments are selected using a robust investment process, focusing on investment and operational due diligence, which is undertaken by the internal Border to Coast team supported by third-party service providers.  An integral part of this process is a strong focus on how managers incorporate ESG and responsible investment considerations into their investment process and we continue to work with the industry to enhance standards in this area.

The first two tranches, Series 1A and 1B, saw a respective £1.8bn and £1.2bn invested into private markets – with the commitments for 1C taking the total assets within the Border to Coast private markets programme to £5.7bn.

INFRASTRUCTURE

  • KKR Diversified Core Infrastructure Fund ($275m) – KKR is a global private markets manager with a dedicated and well-resourced infrastructure team.  The Fund will focus on investing in critical core infrastructure predominantly in North America and Western Europe.
  • Stonepeak Asia Infrastructure Fund ($210m) – Stonepeak is an independent asset manager recognised as one of the largest infrastructure managers globally.  The Fund will focus on investing in infrastructure assets across Asia within the communications, transport and logistics, and energy transition sectors.
  • Meridiam Sustainable Infrastructure Europe IV (€100m) – Meridiam specialises in investing in essential infrastructure opportunities that require substantial development which offer higher returns than fully operational projects. The Fund will invest in Europe across the three key themes of mobility (movement of people and goods), energy and transition, and environmental and social infrastructure.
  • Digital Colony Partners II ($210m) – Digital Colony is considered to be the global market leader in digital infrastructure with extensive resources and a strong track record. The Fund will target investments in cell towers, data centres and fibre broadband networks globally.

PRIVATE EQUITY

  • Strategic Value Special Situations Fund V ($130m) – Strategic Value Partners focus on ‘stressed’, ‘distressed’, and ‘deep-value’ opportunities, targeting mid-market investments in the US and Europe.  The Fund will look for opportunities where it can be actively involved in the financial restructuring and subsequent operational improvement of companies.
  • Insight Partners XII ($140m) – A sector specialist manager focused on providing strategic and operational support to accelerate growth in software, software-enabled services, and internet companies predominantly in the US.
  • HarbourVest Co-Investment Fund VI ($180m) – Large private markets specialist with long-standing relationships with General Partners (GPs) through its extensive primary and secondary businesses. The Fund is a co-investment programme investing alongside high-quality GPs in buyout and growth equity transactions.
  • Baring Asia VIII ($140m) – Baring provides a strong regional presence across Asian markets with extensive experience in cross-border transactions.  The Fund will make Asia-focused buyout and control investments with a focus on operational improvements.

PRIVATE CREDIT

  • Ares Senior Direct Lending II ($208m) – Ares is a leading global direct origination platform with extensive borrower relationships, which has a strong track record with consistent performance through market cycles and low loss rates.  The Fund has a first lien strategy targeting middle and upper middle market companies in the US.