BORDER TO COAST DELIVERS BENEFITS OF PENSIONS POOLING WITH A FURTHER £1.7BN OF PRIVATE MARKET INVESTMENTS FOR LGPS PARTNER FUNDS
Posted on October 4th, 2023
- Border to Coast confirms a further £1.7bn investments in its private markets programme during 22/23
- This includes £350m under the Pool’s ‘Climate Opportunities’ proposition, which is delivering investment to drive the transition to Net Zero
- The scale of investments is resulting in significant cost reductions – c. 26% reduction in headline fees to date
Border to Coast Pensions Partnership (“Border to Coast”) has confirmed c.£1.7bn (subject to currency fluctuations) of new investments in its £12bn private markets programme, with commitments in private equity (c.£261m), infrastructure (c.£502m), private credit (c.£486m), and climate opportunities (c.£452m).
Border to Coast’s innovative £12bn private markets programme is integral to its delivery of cost-effective access to a wider range of investments on behalf of its 11 LGPS (Local Government Pensions Scheme) Partner Funds, which have assets totalling c.£60bn.
These most recent commitments by Border to Coast include delivering investments into:
- the energy transition and supporting investments that further decarbonisation goals
- the digital revolution and assets to support growth in data and digital communication
- growth opportunities in emerging markets.
“As a large and sophisticated investor, we are securing high quality and cost-effective investment opportunities for our Partner Funds. These have the potential to offer enhanced long-term investment returns while reducing costs.”
£350m of the new investments are part of ‘Climate Opportunities’, which targets attractive returns via investments seeking to have a material positive impact on climate change and support net zero carbon emission goals. Commitments include a UK focused strategy targeting assets which support the net zero transition including greenfield renewables power generation, grid infrastructure and storage assets.
The programme is also delivering investment into a range of growth assets. This includes a co-investment into one of the largest co-located solar and battery energy storage systems projects in the world, Edwards Sandborn which, once completed, will deliver 1,300 MW and displace more than 320,000 tons of CO2 emissions annually.
Ian Sandiford, Head of Investments (Alternatives), Border to Coast, said: “Climate Opportunities is an innovative investment strategy which is delivering significant investment to enable the energy transition to net zero, supporting both our Partner Funds’ investment strategies and our own commitment to Net Zero.”
The scale of investments has enabled significant cost reductions – with total estimated cost savings to date being c. 0.4% p.a. (c. 26% reduction in headline fees), aggregated across all strategies.
These £1.7bn investments conclude the £4bn ‘Series 2A’ private markets programme first announced in April 2022; in December 2022 Border to Coast confirmed the initial £2.2bn of investments of this strategy.
PRIVATE MARKETS PROGRAMME ‘SERIES 2A’ COMMITMENTS (1 October to 31 March)
ARA FUND III ($120m commitment): The SFDR Article 9 Fund will seek growth-stage investments within four themes: decarbonisation, energy efficiency, resource conservation and emissions management. The approach to these sectors is differentiated, with a focus on supporting carbon reducing and/or carbon–neutral businesses.
MACQUARIE GIG ENERGY TRANSITION SOLUTIONS ($100m commitment): GIG is a global green investor specialising in green infrastructure principal investment, project delivery and the management of renewable energy assets, and related services.
HY24 CLEAN H2 INFRA FUND (€100m commitment): The SFDR Article 9 fund Is managed by Hy24, the world’s first investment manager fully dedicated to scaling up the hydrogen economy. The fund has a global mandate, providing capital to fund credible, large scale clean hydrogen infrastructure projects.
QUINBROOK RENEWABLES IMPACT FUND (£90m commitment): a UK focused strategy targeting assets which support the net zero transition including greenfield renewables power generation, grid infrastructure and storage assets.
NEXTPOWER UK ESG FUND (£90m commitment): an Article 9 fund specialising in the development, investment and management of new, subsidy-free solar projects in the UK. The Fund is managed by Next Energy Capital, a specialist solar investment and asset manager with over 200 solar plants globally.
AUDAX PRIVATE EQUITY FUND VII ($90m commitment): invests in growing, niche market leaders with a clear strategy focused on buy-and-build investments in the North American middle market. The Fund will be diversified across six core industries: business services; consumer; financial services; healthcare; industrial services and technologies; and software and technology.
ALPINVEST CO-INVESTMENT FUND IX ($150m commitment): provides access to co-investment opportunities from a range of leading GPs across the private equity spectrum, including large and middle market Buyout, Growth Capital, and Venture Capital, as well as Mezzanine and Distressed Debt, in North America, Europe, Asia Pacific and emerging markets.
INSIGHT PARTNERS XIII ($80m Commitment): strategy focused on growth companies in the software sector. Insight focuses solely on investing in growth-stage software, software-enabled services, and internet businesses. The manager takes a flexible, stage-agnostic approach, targeting growth-stage software businesses through both minority and control investments.
EQT INFRASTRUCTURE VI ($195m commitment): a value-add infrastructure strategy predominately focused on North America and Europe. The manager targets infrastructure and infrastructure-like assets across four key verticals: Digital; Energy & Environment; Transport & Logistics; and Social.
Vauban CIF IV (€150m commitment): will seek to invest in mid-market, core infrastructure opportunities mainly in continental Europe. The fund will invest in core infrastructure assets across four main sectors: Digital; Energy Transition; Mobility/Transport; and Social.
Brookfield Co-Investment Vehicle ($126.5m commitment): a bespoke vehicle for Border to Coast providing access to co-investment opportunities originating from Brookfield’s infrastructure funds.
Meridiam Sustainable Waste & Water Fund (€56m commitment): provides access to a range of water and waste assets, predominately in developed Europe but also globally. MSWWF has been classified as an SFDR Article 9 impact fund, underlining the highly sustainable nature of a business that seeks to preserve water resources, recycle waste, and generate sustainable energy from waste.
Axium Infrastructure: B2C ES Coinvest ($60m commitment): co-invest alongside Axium Infrastructure North America (“AINA”) in their acquisition of a majority stake in one of the largest co-located solar and battery energy storage systems projects in the world, Edwards Sandborn (“ES”).
BLACKSTONE REAL ESTATE DEBT STRATEGIES V ($302m commitment): the strategy invests in loans and securities backed by high quality real estate assets globally, with an investment approach focusing on floating rate debt, high conviction sectors and capital preservation with current income generation.
ARES CAPITAL EUROPE VI (£226m commitment): the fund will seek to provide flexible debt capital to European mid-market and large-cap companies, taking advantage of a growing private lending opportunity.
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