BORDER TO COAST ANNOUNCES FINAL INVESTMENTS IN FIRST £5.7BN PRIVATE MARKETS PROGRAMME
Posted on July 14th, 2022
- With £1.5bn of new commitments, Border to Coast has now committed all £5.7bn of its initial three-year Private Markets programme.
- The programme has delivered a c.24% reduction in fees while providing access to a wide range of investments, including specialist sectors and managers.
- Border to Coast has established effective long-term relationships with the investment industry while driving improved ESG standards in private markets.
Border to Coast Pensions Partnership (“Border to Coast”) has completed investment in its initial £5.7bn Private Markets programme (“Series 1”), successfully securing a diverse range of new investment opportunities for its Local Government Pension Scheme (LGPS) Partner Funds and delivering a c.24% reduction in fees.
First launched in 2019, the three-year programme focused on infrastructure, private equity and private credit and, taking advantage of Border to Coast’s scale, aimed to secure cost-effective access to private markets and the potential for enhanced long-term returns on behalf of its Partner Funds. In total, the programme invested into 61 funds and made three co-investments.
The final tranche of the programme was announced in June 2021 and has now been completed with £1.5bn of new commitments to infrastructure (£307m), private credit (£915m), and private equity (£232m) funds.
As a responsible investor, Border to Coast has embedded Environmental, Social, and Governance (ESG) considerations into its investment process, and continues to work with the industry to enhance standards in this area.
“The success of our Private Markets programme is a prime example of the benefits pooling offers. It has delivered cost-effective access to investments that our Partner Funds in the LGPS may not have otherwise been able to access, and which offer the potential for attractive long-term, risk adjusted returns. It is managed by our experienced and dedicated private markets team which provides strengthened governance, oversight, improved market access, and a commitment to driving standards on responsible investment and stewardship of assets.
“With all £5.7bn of assets committed within our first programme, we are now looking ahead to the opportunities we can pursue as part of our second programme – which included the innovative Climate Opportunities proposition – and continuing to deliver significant benefits for our Partner Funds.”
Following the success of the first programme, a second three-year programme was announced in April 2022 with initial Partner Fund commitments of a further £4.1bn, taking the total size of the Private Markets proposition to date to almost £10bn.
Final Series 1 investments
The two new co-investment deals are:
- John Laing Group (£60m commitment): A co-investment alongside KKR into John Laing, a developer, owner, and operator of a globally diverse range of public infrastructure assets that deliver societal benefits, such as hospitals, energy, and transport projects. With a highly experienced team specialising in public-private partnerships (PPP’s), it currently manages 40 projects across four continents.
- Vertical Bridge REIT ($68m commitment): A co-investment alongside DigitalBridge into Vertical Bridge, the largest private owner and operator of mobile communication infrastructure sites in the United States which is expected to benefit from the rollout of 5G technology. Certified CarbonNeutral® in 2020 Vertical Bridge became the first tower company in the world to reach net zero emissions.
INFRASTRUCTURE
- Axium Infrastructure North America IV ($204m commitment) – an open-ended fund investing in core transportation, energy and social infrastructure assets in Canada and the US.
- Arcus European Infrastructure Fund (€175m commitment) – primarily targeting investments in European telecoms, transport and energy sectors with a focus on emerging subsectors.
PRIVATE CREDIT
- Brookfield Real Estate Finance VI ($220m commitment) – a real estate debt strategy lending against high-quality property assets in North America and Western Europe.
- Ares SSG Capital Partners VI ($132m commitment) – a global private credit manager focused on opportunities including restructuring situations, deep value acquisitions, motivated bank sellers and acquisition or growth financing in Asia.
- BlackRock European Middle Market Debt Fund (£185m commitment) – BlackRock is the world’s largest asset manager with a large independent global private markets division. The Fund will focus on senior secured lending to middle market companies, with a tilt towards conservative or defensive companies and sectors.
- HPS Core Senior Lending Fund II ($246m commitment) – the Fund will invest in directly originated, senior secured term loans, to middle and upper middle market companies primarily in North America.
- KKR ABFP ($172m commitment) – The Fund will target investments in private Asset Backed Finance (ABF) investment opportunities in the US, Europe, and developed Asia, with a focus on consumer/mortgage related assets, hard assets, and the small-medium enterprise sector.
PRIVATE EQUITY
- StepStone VC Opportunities VII ($100m commitment) – The Fund will focus on expansion stage and late-stage venture capital investments in the technology, communications and healthcare sectors.
- General Catalyst XI – Aggregator ($100m commitment) – A US venture capital manager, the Fund aggregates commitments to three underlying venture funds – Creation (seed stage), Ignition (early stage), and Endurance (late stage).
- PAI Partners VIII(€100m commitment) – a pan-European manager that targets buyout investments in the upper mid-market space across food and consumer, business services, industrials, and healthcare in Europe and the US.
Border to Coast’s £5.7bn Series 1 Private Markets programme contained three one-year tranches – 1A (£1.2bn), 1B (£1.8bn) and 1C (£2.7bn). These commitments were spread across three asset classes: infrastructure (£2.5bn), private equity (£1.7bn), and private credit (£1.5bn).
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