Essex pension fund open to infra debt strategies

The UK pension fund is considering infrastructure debt strategies as it begins selecting managers for a £100m allocation.

Essex County Council Pension Fund is seeking a manager for its £100 million ($127 million; €119 million) allocation to infrastructure investments.

The request for proposals published on the Tender Electronic Daily, a supplement of the Official Journal of the European Union, says that it is looking to place 2 percent of its portfolio in the asset class.

Infrastructure debt funds will be considered, but only as “part of a broader solution” as they are “unlikely to deliver a high enough return in isolation”, according to the TED documents. The pension fund is looking to either invest the whole amount with one manager or split it equally between two. Listed infrastructure fund strategies will not be considered.

Furthermore, a track record of managing £500 million of assets is the bar firms need to reach in order to be considered. The capital can either be deployed, committed to projects or have confirmed contributions from individual investors. The fund will target UK, European or global opportunities.

Managers have until 22 December to submit their proposals.

A representative from the pension fund did not immediately respond to a request for comment.

The firm has invested in infrastructure strategies managed by M&G Investments and Partners Group, where the total allocation amounts to 6 percent of the overall portfolio. It was among the first UK local government pension schemes to target the asset class and in its recent 2015-2016 accounts confirmed it would not be committing further to M&G’s Infracapital fund in 2017.

The fund’s private debt exposure makes up 2.5 percent of the overall portfolio with an £80 million investment in vehicles managed by Alcentra. The breakdown of the investment is £56 million in the direct lending fund and £24 million in the global multi-credit fund.