Border to Coast Pensions Partnership has announced two new propositions in a significant expansion of its private markets programme to £16bn following further commitments from its Local Government Pension Scheme (LGPS) partner funds.

The latest commitments include £0.5bn pledged to an innovative ‘UK opportunities’ strategy launched by Border to Coast this April. Designed to direct long-term high-quality investment into ‘productive finance’, it will invest in areas such as housing, transport, energy and growth finance, supporting new building and development across the UK.

Also included is a further £1.2bn committed to Border to Coast’s second Climate Opportunities offering which invests in projects and businesses that are expected to make a material contribution to decarbonising the global economy. The second offering builds on the £1.4bn already invested through ‘Climate Opportunities 1’ which was launched in 2022.

The programme will also invest funds across infrastructure (£740m), private equity (£395m), and private credit (£797.5m).

First launched in 2019, Border to Coast’s private market programme offers LGPS Partner Funds access to investment opportunities in the UK and overseas, including co-investments. Taking advantage of Border to Coast’s scale, it aims to secure enhanced long-term returns and cost-effective access to private markets through building strong partnerships with asset managers.

With an additional £3.6bn committed in April 2024, the pool’s private markets programme saw approximately £12bn invested to date, with an estimated 28% reduction in fees secured for partner funds.

Border to Coast has been steadily increasing their investment to the private markets programme over the years. Before this, in October 2023, the pool added £1.7bn to its programme confirming further investment in private equity (£261m), infrastructure (£502m), private credit (£486m) and climate opportunities (£452m).

In August 2023, it said that it doubled its private markets deployment in investments that contribute to the transition to a lower carbon economy to £1.4bn up from £600m the previous year.

In April 2023, Border to Coast received £2.3bn of commitments from its partner funds as part of the second phase (Series 2B) of the three year ‘series 2’ private markets programme, which has previously seen £4bn added in April 2022, and £2.2bn in December 2022.

Joe McDonnell, chief investment officer at Border to Coast, said: “The success of our private markets programme to date is testament to the significant benefits pooling continues to bring to the table.

“Our collective scale and strong alignment with our partner funds’ needs has resulted in not only sizeable fee reductions and greater potential for attractive long-term returns, but also access to a broader range of global investments, the development of strategic partnerships with UK and global asset managers, and the ability to focus investment into areas such as climate solutions.”

McDonnell said that partner funds’ support for the private markets programme ensures that Border to Coast can maintain a commitment to proprietary and portfolio management and confidently develop new and innovative propositions.

Border to Coast to vote against board chair of oil majors Conoco Phillips and Phillips 66

As part of its engagement escalation with the oil and gas sector, Border to Coast has further strengthened its voting approach for oil and gas majors in its portfolios and increased the number of companies it is publicly pre-declaring its climate votes for ahead of their annual general meetings.

Earlier this week Border to Coast said it will vote against the chair of the board at oil majors Conoco Phillips and Phillips 66. Both companies have been subject to Climate Action 100+ collaborative engagement but have still not yet adopted adequate net zero targets and decarbonisation plans, the pool said.

It explained that it will vote against Conoco Phillips because it does not include relevant Scope 3 emissions in its net zero targets and the targets are not aligned with limiting global warming to 1.5°C. It also fails to meet every CA100+ net zero benchmark indicator for its decarbonisation strategy.

As for Phillips 66, the pool said the oil major does not have a net zero target of 2050 or sooner, and while it does have a medium-term target that covers at least 95% of its Scope 1 and 2 emissions and its most relevant Scope 3 emissions, it is not aligned with limiting global warming to 1.5°C.

The pool added that Phillips 66 also fails to meet every CA100+ net zero benchmark indicator for decarbonisation strategy.

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