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Brent pension scheme sets sights on infrastructure, 'green' private equity

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UK - The London Borough of Brent's £453m (€520m) pension scheme has allocated 5% of its portfolio to infrastructure investments and made a renewed commitment to clean energy private equity projects.

The London local authority scheme will increase its infrastructure investment from 1.3% to 5% (£20m) through a holding in Alinda Capital Partners, which invests in developed markets, over the next three years.

George Crane, councillor and chair of the Brent pension fund investment sub-committee, said: "Research has indicated infrastructure assets - roads, bridges, hospitals - can yield steady inflation-linked returns over a long period."

At the same time, the public pension fund has announced a £10m commitment to a clean energy private equity fund run by Capital Dynamics.

The Solar Energy fund, which was scheduled for launch at the end of September, invests in roof-top panels used commercially in the US.

Profits are generated by selling the energy created back to the national grid.

Brent said: "Capital Dynamics believes the J curve will be short, that capital will be returned quickly, but that income will continue over the long term.

"Fees are in line with other funds - 1.75% plus 15% of profits above a return of 8% per annum - the opportunity appears to be good, and Capital Dynamics has recruited an experienced team to manage the investment process."

Brent's current private equity investment has suffered during the market turmoil, and as at end of December 2009, the fund showed a loss of £0.5m form the asset class.

However, the fund expects to return to the black as markets recover.

Further issues surrounding Brent pension fund's alternative investments relate to the ongoing underperformance by Henderson's PFI Secondary II fund.

Martin Spriggs, head of exchequer and investment at Brent, said that while it was not unusual for these kinds of investment to make losses in the early stages, he would investigate whether the scheme should enter legal action against the fund manager alongside 30 other disgruntled investors.
 

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