LPFA, Lloyds provide final seed capital for infrastructure fund
UK – The UK's Pensions Infrastructure Platform (PIP) has attracted £1bn (€1.1bn) in launch capital, following soft commitments from the London Pensions Fund Authority (LPFA) and trustees of the Lloyds TSB scheme.
Alongside the announcement of the final two seeding investors, it was confirmed that a corporate administration structure was now in place and that PwC would help select a fund manager for the vehicle.
The PIP – the result of a joint venture between the Pension Protection Fund (PPF) and the National Association of Pension Funds (NAPF) – has been under development since the 2011 Autumn Statement and so far seen eight other pension funds confirm their involvement.
The LPFA, responsible for a number of the UK capital's legacy pension funds, signed a second memorandum of understanding at the same time to promote the idea of infrastructure investment among institutional investors and has now committed capital to the vehicle.
Edmund Truell, newly appointed chairman of the £4.2bn LPFA, said the PIP would help it meet its liabilities going forward.
"We are delighted to be able to support this initiative while at the same time being confident our funds will enjoy attractive, risk-mitigated returns," he said.
Eric Stobart, chairman of the investment and funding committee for the Lloyds TSB Group Pension Schemes, said he was pleased to have become a founding investor and said infrastructure should be an attractive asset class.
Both Lloyds and the LPFA have made soft commitments of £100m each, bringing total commitments for the fund to its £1bn target.
The PIP is still hoping to launch by the end of the second quarter, and Joanne Segars, chief executive of the NAPF, said the progress made since the initiative was announced was "excellent".
"Infrastructure projects can be a very good match for pension fund liabilities, but, so far, UK pension funds have struggled to explore this asset class," she said.
"This new platform will make it much easier for them to do so."
Founding investors will provide seed capital once an investment strategy has been agreed.
The NAPF added that the PIP would aim to invest core infrastructure, free of construction risk.
Alan Rubenstein, chief executive of the PPF, previously said a management fee of 50 basis points was aimed for, and that initial plans to launch the platform had been "very optimistic".
BA Pensions was last November confirmed as a participant, alongside the UK's largest local government pension fund, the £113bn Strathclyde, the Railway Pension Scheme and the pension funds for BT and BAE, among others.