The Local Pensions Partnership (LPP) has today launched its second fund, pooling private equity assets into a £1.8bn (€2.1bn) vehicle.

LPP was created by UK local government pension schemes the London Pension Fund Authority (LPFA) and Lancashire County Pension Fund a year ago, and launched its first pooled vehicle in November.

The private equity assets will be managed by LPP Investments, a subsidiary of LPP with regulatory approval to run money for other pension schemes.

The two pension funds reported roughly £755m in existing private equity investments at the end of March 2016, shortly before launching LPP. The size of the new pooled vehicle reflected LPFA and Lancashire’s total commitments to the asset class, an LPP spokesperson said.

LPP chief executive Susan Martin said the partnership was developing pooled vehicles for infrastructure, total return, fixed income, and credit.

“As a not-for-profit pension services organisation, LPP is implementing an effective investment management structure that helps to deliver cost savings and investment benefits to our clients, their employers, and scheme members,” she said.

In a statement announcing the private equity launch, LPP said its Global Equities Fund had “delivered a significant reduction of more than £7.5m per annum in the overall costs for the founding investors”.

The Berkshire Pension Fund is in negotiations to become a partner in the LPP. It had roughly £328m in private equity at the end of March 2016.

Public sector pension schemes in the UK increased their allocations to alternatives – including private equity – by nearly two-thirds in the three years to the end of 2016, according to recent research by State Street.