The local authority asset pool has announced £3.6bn worth of fresh investment into new and existing private markets strategies.
The strategy is specifically targeting UK “productive finance assets”, in line with the government’s Mansion House objectives.
In a press release, Border to Coast said the portfolio would focus on “long-term investment into the UK economy” through purchasing assets such as new-build housing, commercial properties, regeneration projects, renewable energy, grid infrastructure, and finance for early stage and growth companies.
It will also target “additionality”, the pool said, by “financing new projects that are also expected to add value to the local and wider UK economy”.
The new strategy was recognised at Pensions Expert’s Innovation Awards, with Border to Coast taking two prizes for the concept at a ceremony in London on 1 May.
Joe McDonnell, chief investment officer at Border to Coast, said the proposition was “innovative” and “unique” due to the wide range of assets it aims to invest in. It has already received £500m in commitments from Border to Coast’s client funds.
Major private markets expansion
The new launch forms part of a major new push into private markets from Border to Coast and its Local Government Pension Scheme (LGPS) clients.
In total, the 11 LGPS funds within the Border to Coast pool committed £3.6bn to various strategies in April this year, including the UK Opportunities strategy and a new Climate Opportunities offering.
This is the second climate-themed private markets strategy the pool has launched this time raising £1.2bn to invest in “projects that support the journey to net-zero carbon emissions”, Border to Coast said.
The first Climate Opportunities fund was launched in 2022 and raised £1.4bn.
In addition, Border to Coast also reported £740m in new infrastructure commitments, plus total investments of £395m into private equity and £797.5m into private credit.
The new commitments mean Border to Coast’s private markets programme has raised £16bn from its LGPS funds in five years – more than a quarter of all assets managed by the 11 funds in the pool. Of this, £12bn has been deployed.
The pool estimates that it has achieved a 28% reduction in fees for its partner funds against alternative options due to Border to Coast’s scale and implementation processes.
McDonnell 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.”
He also highlighted the internal team’s proprietary research and portfolio management capabilities.
Further reading
Border to Coast bags two awards at Investment Innovation Summit (2 May 2024)
Schemes eager to back government’s infrastructure investment drive (30 April 2024)
