Strathclyde grows renewables exposure with offshore wind fund

Strathclyde Pension Fund is to invest £50m (€70m) in an offshore wind farm fund launched by the UK Green Investment Bank (GIB), as part of the local authority scheme’s strategy to grow its holdings in renewables.

The allocation was discussed at the £15.5bn fund’s investment committee this week, alongside a £30m allocation to an onshore wind fund run by Temporis.

It will sit within Strathclyde’s New Opportunities Portfolio (NOP), which at the end of March comprised over two dozen opportunistic investments in infrastructure and debt financing worth £328m.

In a report prepared for the meeting, the fund’s investment manager George Finnie noted that the £50m investment was “at the larger end of [the NOP’s] investments to date”.

But Finnie argued this was justified to ensure Strathclyde had a “meaningful stake” in the fund managed by UK Green Investment Bank Financial Services – a subsidiary of the state-owned bank – which has a target raise of £1bn and for its first close attracted capital from the Abu Dhabi Investment Authority and two other LGPS funds.

Speaking at the RI Europe conference on Tuesday, Finnie confirmed the investment committee had approved the allocation to the offshore wind fund.

The local authority fund has previously committed £10m to a community power project headed up by the GIB, with the money set to fund the construction a hydro-electric power station in Scotland.

Finnie added that Strathclyde hoped to grow its renewables exposure, which stood at £150m, with the potential for direct investments “assuming we get the appropriate resource from within the council”.

Other renewables exposure will come from a £20m investment to an Aviva Investors solar power fund, which forms part of Strathclyde’s £100m soft commitment to the Pensions Infrastructure Platform (PIP).

To date, the £70m in total committed to the PIP – launched by the National Association of Pension Funds and so far only comprising a £260m fund managed by Dalmore Capital – was the fund’s largest single holding within the NOP. 

The Aviva Investors-managed fund, announced in February, is set to close in September.