The UK’s defined benefit pensions lifeboat fund has made its first direct investment into the country’s social housing sector, providing funding for Monmouthshire Housing Association (MHA).

The Pension Protection Fund (PPF) provided £65m (€74m) of a £85m deal to refinance the housing association’s entire loan portfolio. The funding is for 40 years and sits alongside £20m of flexible finance provided by existing lender Barclays.

According to the PPF, the deal involved one of the lowest all-in interest rates through a private placement for a UK housing association in the past 12 months.

The fund said the transaction supported the delivery of MHA’s environmental, social and governance (ESG) aims, which the PPF and Barclays were keen to support.

Barry Kenneth, CIO at the PPF, said: “Our long-term investment in MHA is a unique deal for us and secures long-term sustainable returns which enables us to deliver on our financial commitments to our members.

“It also showcases our in-house expertise and capabilities in portfolio management and origination, which provides a greater degree of control over our portfolio and enhances post-fee returns.”

He added: “We see strong alignment between this investment and our responsible investment strategy in creating positive social and environmental outcomes.”

John Keegan, chief executive officer of MHA, said PPF investing £65m with a 40-year maturity “demonstrates the confidence it has in MHA and in our future strategic direction”.

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