The Local Pensions Partnership (LPP)—a £10 billion ($13 billion) collaboration between two UK public pensions—has announced its first pooled mandate.
The partnership between the London Pension Fund Authority (LPFA) and the Lancashire County Pension Fund (LCPF) has launched a £1.2 billion property mandate, the LPP said in a statement today. It will combine £850 million of cash from both pensions with their existing direct assets.
Knight Frank Investment Management has been appointed to oversee the allocation, and will combine “specialist income and value-add strategies,” the LPP said.
It is the first formal investment collaboration between the two pensions since the LPP was given regulatory approval earlier this year.
“This allocation extends further the strategic partnership between LCPF and LPFA through the Local Pensions Partnership,” said Co-CIO Chris Rule. “We’re pleased to not only be talking about collaboration and pooling across the Local Government Pension Schemes [LGPS], but actively engaging in it.”
“We are of the view that the best outcome for Berkshire will be to become a shareholder partner in LPP.”While the country’s political landscape continues to shift following last month’s referendum, behind the scenes the LGPS have all but finalized plans to pool their investments ahead of the government’s July 15 deadline for proposals.
The £1.7 billion Berkshire Pension Fund is set to become the third partner in the LPP following a committee meeting on Monday. Pension Fund Manager Nick Greenwood recommended to the fund’s board that Berkshire join the LPP.
“While the government’s insistence on mandatory pooling of English and Welsh LGPS funds’ investments is not entirely welcome, we are of the view that the best outcome for Berkshire will be to become a shareholder partner in LPP,” Greenwood wrote in a briefing document.
His report added that, on agreement of the partnership, Greenwood will join the LPP’s investment committee alongside Co-CIOs Rule and Mike Jensen. Berkshire has expressed a desire to retain up to 10% of assets outside of the LPP, primarily to invest in local projects.
Greenwood previously attempted to pool Berkshire’s investments with those of the Oxfordshire and Buckinghamshire in 2014, before the UK government’s nationwide plans were announced. However, “Project BOB” was abandoned in December 2014 after Berkshire’s partners pulled out.
Elsewhere, the London CIV last month added two funds to its lineup as it continues to pool the capital’s 33 local authority pensions’ assets. The new funds are both “absolute return” multi-asset products, run by UK boutiques Ruffer and Pyrford International, part of the BMO Global Asset Management. The London CIV has launched five pooled funds so far under the watch of CIO Julian Pendock.
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