Gresham House's BSIF II secures GBP100m in first close
Gresham House plc, the specialist alternative asset manager, has secured GBP100 million in commitments for the first close of its GBP500 million British Sustainable Infrastructure Fund II (BSIF II) strategy.
The BSIF II strategy, which draws on the UN Sustainable Development Goals, will follow the same modern, impact driven approach to infrastructure pioneered by BSIF I. It invests in new Sustainable Infrastructure: profitable, real asset based solutions developed to address environmental and societal challenges, with positive impact a key driver of every investment decision. Specifically, it focuses on six sub-sectors where its Sustainable Infrastructure solutions have the potential for greatest impact and financial reward: resource efficiency; digital inclusion; waste solutions; regeneration; decarbonisation; and health and education.
The closed ended strategy has a 12-year time horizon and targets an annual net return of 8-10 per cent, including a target income yield of 5 per cent per annum.
The BSIF II strategy is a direct follow-on to the successful first BSIF infrastructure fund, which is now fully committed and has nine investment platforms that focus on the provision of innovative, greenfield infrastructure solutions typically in the less competitive, sub-GBP50 million scale part of the market. These platforms now provide BSIF II with well over GBP1.3 billion of identified Sustainable Infrastructure pipeline.
BSIF II will for the first time have the potential to follow its investments outside of the UK to support their strategic global growth. Alongside a key focus on portfolio construction and scalable asset platforms, BSIF II will continue the requirement for demonstrable and measurable environmental and societal impacts as a key driver for long-term asset value.
Given BSIF I reached its fundraise capacity of GBP300 million last year, including one UK Treasury and six UK local authority pension fund limited partners (‘LPs’), the first close of BSIF II was exclusively reserved for existing LPs. Worcestershire Pension Fund and Teesside Pension Fund have now made new commitments to BSIF II totalling £100m. Gresham House plans to pursue subsequent closes with remaining existing LPs alongside a wider group of UK and overseas limited partners later this year and early next year.
The substantial commitments from Worcestershire Pension Fund and Teesside Pension Fund represent the growing recognition from institutional investors of the importance of socially responsible and impactful investments alongside the consistent requirement for strong, risk-adjusted financial returns.
The BSIF strategies are managed by Gresham House’s dedicated Sustainable Infrastructure (SI) team of investment professionals, deeply experienced in the sectors and deal size targeted.
Peter Bachmann, Managing Director, Gresham House Sustainable Infrastructure, says: “Real assets are often overlooked as part of the solution for a sustainable future. However, infrastructure underpins the way society operates and is critical to solving some of the most pressing sustainability issues - such as how we better manage our waste, produce food more efficiently, tackle the energy transition and bring better access to health and education. These commitments will allow us to further invest in innovative ways to combat key environmental and societal challenges but not at the expense of robust financial returns. Every challenge brings opportunity, and we believe the sustainability thematic amounts to a GBP100 trillion plus global opportunity to decarbonise our planet and help society function better. Our BSIF franchise is now perfectly placed to deliver on this opportunity and create tangible impact.”
Heather Fleming, Managing Director of Institutional Business at Gresham House, says: “We are delighted to see continued interest from local authority pension schemes in our market-leading sustainable infrastructure strategy, BSIF II. It demonstrates a strong desire from institutional investors to gain exposure to assets that provide reliable returns whilst contributing meaningfully to the environmental and societal challenges we all face today. Its focus on the less competed sub-£50m part of the market provides differentiation coupled with our ability to offer LPs co-investment opportunities in their areas of specific interest.”
Elizabeth Eyre, Chair of the Worcestershire Pension Fund Committee, says: “Following our previous investment, this latest commitment to BSIF II adds to our alternatives exposure at a time when securing diversified income streams is increasingly important. We recognise the importance of a strategy that also aligns with our Environmental, Social and Governance values. Infrastructure has always appealed to us for its resilience and income-generating characteristics.”
Cllr David Coupe, Chair of the Teesside Pension Fund, says: “BSIF’s differentiated portfolio is designed not only to deliver strong financial returns but aligns well with TPF’s commitment to sustainable investment. We view this allocation as complementary to our core infrastructure exposure and are pleased to be offered the flexibility to coinvest in locally based opportunities as they arise.”