IFM Investors wins landmark infrastructure mandates with Avon and Dorset Pension Funds

IFM Investors  reinforces its position as one of  the UK’s leading infrastructure managers today,  with the announcement that it has been awarded major infrastructure investment mandates, totalling $364 million (£227 million[1]) by Avon Pension Fund and Dorset County Pension Fund.

The $300 million (£187 million) mandate by Avon Pension Fund, one of the largest to be offered by a local authority scheme, and the $64 million (£40 million) mandate by Dorset County Pension Fund,  are  the schemes’ first investments into infrastructure. This reflects the increasing appeal of the asset  class  as schemes look for sources of uncorrelated returns that can effectively match long term liabilities.

Avon Pension Fund and Dorset County Pension Fund made their allocations to IFM Investors following a collaborative procurement process in which they were advised by JLT Employee Benefits. The mandates will be invested in IFM Investors’ portfolio of core equity infrastructure assets in global developed markets. Owned by 30 not-­‐for-­‐profit pension funds, IFM Investors is one of the world’s largest infrastructure managers with £13 billion in infrastructure equity and debt assets[2].

Matt Betts, Assistant Investments Manager at Avon Pension Fund, said: “We decided to make a  new allocation to infrastructure following a review of our investment strategy in 2013. We wanted to diversify our assets, and looked to infrastructure due to its inflation linked, cash generating and liability-­‐matching qualities. IFM Investors’ portfolio and open-­‐end investment structure, that allows allocations to be made for the long-­‐term, were very attractive to us.”

John Finch, Head of LGPS at JLT Employee Benefits, said: “The open-­‐ended nature of IFM Investors’ fund was a distinguishing and important deciding factor in the procurement process.  This  structure  allows schemes to participate in the long term cashflows of infrastructure assets that  match  their  long  term inflation linked liabilities. The collaborative search process also enabled significant savings to be made for those LGPS Funds involved but still allowed them to make independent decisions on their choice of manager.”

Over 20 corporate and public pension funds and other institutional investors from across Europe, including the UK, Switzerland, Ireland, Germany and the Netherlands, have invested  with  IFM  Investors  in infrastructure equity and debt. Globally, 55 institutional investors made new equity infrastructure commitments to IFM Investors between September 2013 and September 2014.

Annabel Wiscarson, Executive Director, Business Development at IFM Investors, commented: “Investors are getting more comfortable with infrastructure as an asset class as their understanding of it grows, and we expect appetite  to  remain  strong  with  schemes looking  at new allocations. Avon’s first allocation  to infrastructure is both a hugely significant step for the scheme and notable within the broader industry for its size, which far surpasses the average amount being invested by UK local authorities to date.”

The £3.58 billion[3] Avon Pension Fund administers the Local Government Pension Scheme (LGPS) for over 190 employers and almost 90,000 members in the former Avon area.  The  £2.2  billion4  Dorset  County Pension Fund has over 54,000 members.

1 As at 6 October  2014
2 As at 30 September 2014
3 As at 31 August 2014