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Greater Manchester infrastructure fund set to double in size to £1bn

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Greater Manchester’s infrastructure joint venture with the London Pensions Fund Authority (LPFA) is set to double in size to £1bn (€1.3bn) under ambitious plans outlined by the UK’s largest local authority fund.

The £17.6bn Greater Manchester Pension Fund (GMPF) said the infrastructure venture was also in talks to work directly with the £32bn Border to Coast asset pool founded by Cumbria, Surrey and North Yorkshire, and backed the findings of a previous report that there should only be a single infrastructure vehicle across local government pension schemes (LGPS).

Speaking after the Department for Communities and Local Government (DCLG) closed its first consultation on asset pooling among English and Welsh LGPS, GMPF – which is collaborating with Merseyside Pension Fund and West Yorkshire Pension Fund to create the £35bn Northern Powerhouse asset pool – said the three funds were targeting an eventual 10% exposure to infrastructure.

In the pool’s joint submission to the DCLG, the three funds said they had allocated only 3.5% of assets to infrastructure by the end of 2015.

Meeting the 10% target within 3-5 years would require at least a further £2.2bn to be deployed, some of which would boost the GMPF joint venture with the LPFA to £1bn.

The submission also supported the idea of an infrastructure project clearinghouse for the LGPS, an idea previously proposed by the LPFA.

The clearinghouse would conduct due diligence on projects and could act as agent for the LGPS investment pools, the submission by the Northern Powerhouse pool suggested.

It added that, once operational, the clearinghouse could help the pool source investments to help it meet its 10% infrastructure target.

In his own submission to the DCLG, the chair of GMPF, Kieran Quinn, outlined the importance of such a national collaboration on infrastructure.

“We are keen to create a significant investment pool, which will enable us to compete with global wealth funds when bidding for airports, shipping ports and new railway connectivity such as the HS3 high-speed rail link between Leeds, Manchester and Liverpool,” he said.

Quinn added that the Northern Powerhouse pool – named after the government’s policy to boost growth in the region – was in talks with the LPFA and its current partner, the Lancashire County Pension Fund, to collaborate across investments in alternatives and illiquid asset classes.

The two funds have previously admitted they anticipate joining the Northern Powerhouse pool after their own partnership only reached £10bn, well short of the government-mandated £25bn minimum threshold.

There are currently eight asset pools emerging from talks among the LGPS, including the partnership between the LPFA and LCPF.

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