The London CIV – the asset pooling vehicle for the UK capital’s local government pension schemes (LGPS) – has selected StepStone to be its first infrastructure manager.
According to local council documents seen by IPE, the infrastructure fund is currently raising money from the 32 London borough pension funds that make up the pool’s client base.
The first close is scheduled for 1 April, with subsequent closes slated for 1 September 2019 and 1 April 2020.
The infrastructure launch was initially slated for last year but was paused following a wide-ranging review of the London CIV’s structure, operations and governance.
The new fund will invest between 50% and 70% in European assets with a UK focus, according to documents circulated to prospective investors.
StepStone can invest up to 20% of the fund in greenfield assets, and can accommodate direct investments and co-investments.
The fund will target a net return of 8-10% a year with a target cash yield of 4-6% a year.
StepStone is a global private markets specialist that runs money across private equity, private debt, real estate, infrastructure and other real assets categories.
According to its website, the company has deployed roughly $20bn (€18bn) in infrastructure investments via funds and co-investments.
A consultation document from the Ministry of Housing, Communities and Local Government published in January stated that the LGPS funds should “set an ambition on investment” in infrastructure.
It added: “The government expects pool companies to provide the capability and capacity for pools over time to move towards levels of infrastructure investment similar to overseas pension funds of comparable aggregate size.”
Since its launch in 2016, the London CIV has pooled roughly £17.4bn (€20.4bn) of the total £36bn assets held by London’s LGPS funds.