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Border to Coast Pensions Partnership (“Border to Coast”), one of the largest public sector pension pools in the UK with total assets of c. £46bn, has committed £540m to six new infrastructure funds as it continues to provide new investment opportunities for its 11 local government pensions scheme partners.

Since launch, Border to Coast has secured £3bn of Private Market commitments from its Partner Funds.  The six new investments are part of its second Infrastructure offering (series 1B), which received £760m of commitments from ten Partner Funds in April 2020 – 70% of which is now committed.

Mark Lyon, Head of Internal Management at Border to Coast said: “Infrastructure is a key asset class for our Partner Funds as they seek attractive investment opportunities and diversification of risk.

“Thanks to our collective size and our inhouse expertise, we have been able to access high quality investment opportunities, including our first co-investment, whilst generating significant collective fee savings for our investors over the long term.  I’d like to thank the managers involved for their constructive approach throughout the investment process as we continue to operate during the coronavirus pandemic.”

The six investments are:

  • Patria Infrastructure Fund IV – $100m

Patria is a Latin American specialist infrastructure manager with a strong local presence to take advantage of the significant demand for new infrastructure in the region. The manager will pursue “buy and build” and “consolidation” strategies and has extensive operational capability to drive value enhancements.

  • I Squared Global Infrastructure Fund III – $150m

I Squared is a global manager focused on Core+ / Value Add investments across mid-market and large cap companies. The manager has a strong global presence, with access to a team of policy advisers and extensive experience of building platform companies, particularly in renewable energy and transportation assets.

  • Project Ceres – £40m

This is Border to Coast’s first co-investment, a minority stake in a 39-megawatt straw-fired combined heat and power plant in Sleaford, Lincolnshire. The plant can generate electricity for 65,000 homes, saving 50,000 tonnes of CO2 per year. It also provides a market for waste straw generating additional income for local farmers (previously announced in Dec 2020).

  • BlackRock Global Renewable Power Fund III – $125m

BlackRock is a global manager with one of the largest dedicated renewables teams. The Fund provides diversification across strategies (wind, solar, energy storage and distribution) and geographies (North America, Europe and Asia) with a mix of greenfield and brownfield assets. The Fund also complements Border to Coast’s existing investments in renewable strategies.

  • Stonepeak Global Infrastructure Fund IV – $150m

Stonepeak is a North American infrastructure manager with a broad strategy across Core, Core+ and Value Add strategies. It has a strong sourcing capability as well as the ability to add value through operational improvements.

  • Infranode Fund II – €110 million

Infranode is a Nordic manager focused on buy-and-hold investments in mid-market brownfield assets with a focus on Utilities, Renewables, Transport, Social and Digital sectors. The manager has strong relationships with local municipalities which helps to drive deal flow.

These commitments provide exposure to several Border to Coast’s targeted themes within Infrastructure including Operational Value Add, Greenfield, Energy Transition, Digital Revolution and Emerging Markets.

Investments are selected using a robust responsible 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.  As part of the due diligence process, Border to Coast is developing longer-term relationships with key industry participants to enable Partner Funds to collectively benefit from their investments in Private Markets.

The Border to Coast’s Private Markets structure was originally launched in May 2019 to capture the key benefits of pooling for its LGPS Partner Funds. This includes economies of scale, increased resources for due diligence, 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.

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