BORDER TO COAST SET TO DELIVER £250M OF SAVINGS

Posted on July 23rd, 2021

Border to Coast Pensions Partnership (“Border to Coast”), one of the largest public sector pension pools in the UK, has published its third Annual Report as it continues to deliver the benefits of the pooling of Local Authority Pension Schemes (LGPS), and is on track to deliver over £110m of cumulative net savings to its Partner Funds within the first decade of pooling – and over £250m in the first 15 years*.

Established in 2018, Border to Coast has published its third annual report which outlines the progress it has made to support its eleven local government pension schemes (‘Partner Funds’).  This highlights how it is delivering cost savings; supporting the diversification of risk from improved access to a wider range of assets, including infrastructure; and, in having a stronger voice, is increasing the influence of its Partner Funds as active investors.

Chris Hitchen, Chair of Border to Coast, said: “We were created to make a difference – and we are already delivering for and behalf our Partner Funds.  While we are only three years into our initial five-year strategic plan, given the challenges of setting up a FCA regulated asset manager and managing through COVID-19, what we have achieved together with our Partner Funds is truly impressive.”

Border to Coast supports its Partner Funds on £35.4bn of their c.£55bn of assets (directly managing £24.7bn and providing advice on £10.7bn).  With the build costs of a regulated entity completed, the annual cost savings are expected to significantly increase in the years to come.

Over the past year, while working remotely, Border to Coast has recruited 28 new colleagues, bringing its workforce to 100.  This has deepened and expanded its capabilities which has enabled Border to Coast to add greater value – such as its first co-investment in Sleaford Renewable Energy Plant, which can generate electricity for 65,000 homes, saving 50,000 tonnes of CO2 per annum.

The annual report also highlights the progress Border to Coast has made as a responsible investor, receiving A/A+ ratings for its first assessment under the UN supported Principles for Responsible Investment; its engagement in policy advocacy and shareholder activity in collaboration with other asset owners and the asset management industry; and launching a new ESG Private markets framework with Albourne following its concerns at the lack of robust and consistent ESG standards in this asset class.

Since its establishment in 2018 Border to Coast has launched ten investment opportunities: five equity funds, two fixed income and Private Markets opportunities in Private Equity, Infrastructure and Private Credit.  It continues to develop investment propositions, obtaining FCA approval for its Multi-Asset Credit Fund, due to launch later in 2021, and working with Partner Funds to deliver further equity, private market and real estate capabilities alongside support for Partner Funds to meet their strategic objectives and statutory reporting obligations.

Rachel Elwell, CEO at Border to Coast, said: “Some of our Partner Funds are among the largest and most sophisticated investors in the UK but, through collective endeavour, we are still delivering significant cost savings across the pool – for example in a single transaction we saved two Partner Funds £3.5m.  We fully expect to deliver cost savings of £250m in our first 15 years of pooling.”

“While cost savings are important, Border to Coast is driving greater value in a range of other areas.  With our expert in house team, we are opening new investment opportunities for our Partner Funds, particularly in Private Markets.  Having already deployed £3bn, we are regarded as a partner of choice in this sector.

“As a long term strategic investor, investing in a responsible manner is fundamental.  While this is fully embedded in our investment approach, like many investors we are facing the challenges of robust and comparable data in certain investment classes.  Through our collective scale we are able to drive new standards in ESG reporting and disclosure.”

2020-21 Annual Report and Accounts

Border to Coast Investments: £24.7bn (as at 31 March 2021)

Equity

Equity Overseas Developed Markets Equity Fund             £4.2bn

UK Listed Equity Fund                                                             £4.6bn

Emerging Markets Equity Fund                                              £0.8bn

UK Listed Equity Alpha Fund                                                  £1.4bn

Global Equity Alpha Equity Fund                                            £6.1bn

Fixed Income

Sterling Index-Linked Bond Fund                                           £1.4bn

UK Sterling Investment Grade Credit Fund                          £3.1bn

Private Market (deployed)

Private Equity                                                                                   £1.0bn

Infrastructure                                                                                  £1.4bn

Private Credit                                                                                   £0.6bn

* Savings figure is based on current funds launched, in accordance with the methodology for pooling as set out by MHCLG for time period April 2015 to March 2025, and April 2015 to March 2030.  The savings are unevenly distributed between the eleven Partner Funds depending on their asset size, asset mix and their pre-pooling investment style.

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