The London Pensions Fund Authority’s (LPFA) joint ventures with Lancashire and Greater Manchester hope to grow in size by acting as asset managers for other local government pension schemes, Susan Martin has told the IPE Conference & Awards.

The London fund’s chief executive told delegates in Barcelona that the two joint ventures would soon be “opening up” to the rest of the sector to grow in size.

The LPFA’s £10.5bn (€14.8bn) pooling vehicle with the Lancashire County Pension Fund will see the two funds merge investments, liability management and administration efforts.

It recently announced Michael O’Higgins, former chairman of the Pensions Regulator, as its inaugural chair.

Speaking of its £500m infrastructure joint venture with the Greater Manchester Pension Fund, Martin noted that it recently completed its first investment in a green energy fund targeting biomass power plants. 

“Our idea is to make a few more investments, and then we will be opening that up to the rest of local government,” she said, citing the advantage for other funds to avail themselves of the in-house capacity built up by Lancashire, Greater Manchester and the LPFA.

In response to a later question, Martin explained that the infrastructure partnership was set up “with the intention of opening it up to LGPS funds” but that it would only focus on local government clients.

“That doesn’t mean we don’t make investments with other pension funds,” she added, citing the potential for partnerships with other European, Canadian and Australian pension investors.

Martin also said the LPFA-Lancashire partnership was in discussions with other local authority funds and would be open to other schemes acquiring a stake in the venture, or simply opting for it as an asset manager.

Her comments come amid a flurry of activity within the local government sector, with numerous funds in discussion to set up several pooling vehicles, after the UK government expressed its desire to see management costs reduced and a greater focus on infrastructure investment.

The most recent announcement came from funds in Surrey, Cumbria and East Riding, which are in discussions to set up a £9bn pool they hope will grow to £20bn.

Topics