€570m raised by UBS Asset Management for first infrastructure debt fund
UBS Asset Management Infrastructure and Private Equity has set up its first infrastructure debt fund raising €570m ($640m). The Archmore Infrastructure Debt Platform was supported by 17 institutional investors, including pension funds, insurance companies and family offices from Europe and Japan. Low yields and interest rates were attributed to the strong interest, with investors wanting alternative investments such as infrastructure debt. Archmore IDP specialises in private infrastructure debt opportunities in Western Europe, mainly through direct lending. President of UBS Asset Management, Ulrich Koerner said, “Among investors, we see a strong and growing interest in alternatives. Infrastructure debt is an attractive alternative asset class that offers stable, long-term cash flows.”
Local government concerns over asset pooling heard by UK government
The Local Authority Pension Fund Forum (LAPFF) has said that new guidance on investment regulations shows the UK government as having heeded local government pension scheme concerns about asset pooling. The association praised the new guidance released last week by the Department for Communities and Local Government (DCLG) for local government pension schemes (LGPS), saying the government is in “listening mode”. Chair of the LAPFF and of the Greater Manchester Pension Fund (GMPF), Kieran Quinn said, “The real value of this new guidance is that it reflects many of the views submitted to the government by funds about the challenges facing their plans for pooling and the new investment frontiers for local authority pension funds.” The LAPFF welcomed the guidance on pension fund governance, especially the focus on the autonomous role of pension funds and the requirement for pools to be accountable to their individual member funds. The role of the Scheme Advisory Board (SAB) and its new responsibilities were also praised.
0.5% return for Berkshire Pension Fund
The Royal County of Berkshire Pension Fund reported a return of 0.5% for the year to 31 March compared with 10.2% for the prior year period. Over the past three years their annualised returns have averaged out at 4.8%, down from 8.7% for the three years ending 31 March 2015. However, the fund confirmed its investment return in real terms was -0.1% over the year to the end of March 2016 and 4% over the three year period, resulting in it hitting its 4% real return target. The size of its £1.7bn (€2bn) portfolio, hasn’t changed from its value last year. The vast majority of assets are held via funds. Berkshire reported the main underperformers during 2015-16 were emerging market equities and commodities managers, absolute return strategies run by Grosvenor Capital Management also fell short of their absolute return target.
'Value for money' research project launched by UK IGCs and pension providers
Eleven independent governance committees (IGCs) and their UK workplace pension providers are undertaking a research initiative understanding what its members consider to be “value for money”. UK law firm Sackers is co-ordinating the programme. The UK’s Financial Conduct Authority (FCA) published new rules last year where by new bodies set up within contract-based pension funds, to protect member interests, are required to make an assessment as to whether pension scheme members are getting value for money from their workplace personal pension arrangements and to report on their findings. Sackers announced that after producing their first annual reports this year, the IGCs “want to build on the work carried out last year to investigate further how their members approach the topic of value for money”. Those contributing to the research programme are, Aegon, Aviva, Zurich, Fidelity International, Legal & General, Scottish Widows, Standard Life, Virgin Money Old Mutual Wealth, Prudential and Royal London.
Greater Manchester underperforms for second year returning -0.8%
For the second year in a row The Greater Manchester Pension Fund (GMPF) underperformed other local authorities, with an investment return of -0.8% for the year ending 31 March, compared with an average 0.2% achieved by the other local authority pension funds over the same period. GMPF’s 11.7% return last year was also less than the 13.2% achieved by other authorities. The result meant there was a reduction in GMPF’s assets under management, from £17.6bn at the end of March 2015 to £17.3bn this year. It took long-term annualised returns to 6.8% for the five years and 5.7% for the 10 years, to the same date. Councillor Keiran Quinn, said the return was “disappointing” but highlighted an especially difficult year for pensions in general and local authority pensions in particular.
IA says access to global talent of 'utmost importance' post-Brexit
Institutional and retail investors are investing increasing amounts into solutions-based strategies. At the end of last year, £5.7trn (€6.6trn) of assets were looked after by members of the IA, the same as the revised figure for 2014 but equated to an 8% growth per annum over the last decade, according to the survey. At the end of 2015 80% of assets under management in the UK were managed for institutional investors, with pension funds remaining the largest client group, at 40%. In terms of asset allocation, alternative asset classes are growing in importance. The IA said, “Allocations outside the mainstream asset classes continued to increase, reaching 19% by the end of 2015. More than half of assets in this category are now represented by ‘solutions-based’ strategies, as both institutional and retail investors diversify more widely and focus more on investment outcomes.”
Three year strategic direction of activities set out by EIOPA
A work plan has been published by the European Insurance and Occupational Pensions Authority (EIOPA) setting out a three year strategic direction of its activities, from 2017 to 2019. The strategy is outlined in a single programming document (SPD), compatible with European Commission requirements to enhance consistency and comparability across European Union bodies. The SPD specifies the tasks EIOPA is required to fulfil, as well as its strategic objectives and priorities for 2017. The organisation’s expenditures, revenues, organisational structure and staffing are also set out in detail. Three main priorities would remain EIOPA’s main focus, including enhancing supervisory convergence, reinforcing preventive consumer protection and preserving financial stability. The regulatory organisation said, “Supervisory convergence is key in a period where effective implementation of Solvency II is both a challenge and an opportunity. EIOPA is committed to delivering quality regulation and supervision to further build and facilitate common European supervisory culture.”
UK rail investment consortium joined by Greater Manchester, LPFA
The £500m (€570m) infrastructure investment co-operation between the Greater Manchester Pension Fund and the London Pensions Fund Authority (LPFA), GLIL, has partnered with a consortium to fund rail fleets for Abellio East Anglia. GLIL will put forward £45m of equity to the group alongside Standard Life’s SL Capital and RockRail, enabling 58 trains with 387 carriages to increase rail capacity by up to 78% for Norfolk and Suffolk. Senior debt is being supplied by a group of UK and international institutional investors, together with the European Investment Bank, which separately said it put forward €60m. Long-term debt is coming from Legal & General Retirement (LGR) and LGIM clients. Nicholas Bamber, head of private credit at LGIM Real Assets said, “There is a considerable need in the UK for new rolling stock to reduce overcrowding and improve train services, and our clients have a significant appetite to finance such assets.”
Allianz to invest $500m in infrastructure projects with World Bank's IFC
Allianz Group said they are investing $500m (€446m) in infrastructure projects within emerging markets with the World Bank’s International Finance Corporation (IFC). Under the managed co-lending portfolio programme, Allianz and the IFC will supply debt financing for infrastructure projects in emerging markets worldwide. Allianz Global Investors infrastructure debt team, which structured the transaction, will supervise the fund on behalf of investors. A first loss protection, to reflect the risk/reward profile of an institutional investor, will offer Allianz insurance entities access to emerging market infrastructure loans, which have historically only been funded by international development institutions, local banks and some international banks. Andreas Gruber, Allianz CIO, said, “This partnership underlines how we at Allianz can create value for our customers by combining entrepreneurial investment ideas with industry-leading implementation know-how. Together with IFC, we were able to conceive a reliable investment vehicle appropriate to the very long-term perspectives of all parties involved.”