Noticeboard NOTICEBOARD
London CIV, a £50bn pensions pool for 32 local authority schemes in the capital, has launched an alternative credit fund. The £398m fund has three seed investors and seeks to make a return of SONIA +4.5%, net of fees, through investing in securitised assets, loans, high-yield corpo- rate bonds and convertible bonds. It will also invest in investment-grade corporate and government bonds. Scottish Widows is to invest up to £25bn in the next three years in climate aware strategies as part of its plan to decarbon- ise its investment portfolios. Of this, £1bn will be invested in renewable energy, low carbon buildings and energy efficient technologies. The insurer, which manages £190bn of savers money, has also invested £3bn in BlackRock’s Climate Transition World Equity Fund, bringing its exposure to £5bn. Local government pension schemes are being encouraged to invest at least 5% of their portfolios in local assets as part of the government’s Levelling Up agenda. This could potentially see around £16bn allocated to local projects. Legal & General intends to allocate £2.5bn of defined benefit scheme capital to build- to-rent schemes.
During the next five years, the insurer hopes to build more than 7,000 homes for renting. This adds to the £500m it has previously invested in the market. This is part of a strategy to not only gener- ate a financial return but to create a better society by investing in the real economy. Also investing in the residential property market is Big Society Capital, which has teamed up with an investment manager to allocate £195m to building affordable homes.
The impact investor will, along with Cardano, be looking to back property funds which aim to ease the demand for 145,000 new homes in the UK each year while earning inflation-linked returns.
8 | portfolio institutional | March 2022 | issue 111
Big Society Capital’s investment direc- tor, Gemma Bourne, said: “We predict that the social and affordable housing market will reach £8bn by 2025 as more fund managers and investors become aware of their potential to generate gen- uine and positive impact on the UK’s housing crisis.” Pension Insurance Corporation (PIC) has made its first social housing investment in Northern Ireland after lending £100m to a housing association. Apex Housing Association manages 7,000 homes, or a quarter of the coun- try’s social housing stock. It will use the funds to build 1,500 new homes and refi- nance debt.
PIC has also invested £80m in a built-to- rent project in Milton Keynes that will construct more than 300 apartments, 43 of which will be affordable.
The insurer has also lent £128m of secured debt to the University of Birming- ham, which it will use to build a 1,230-room solar powered student accom- modation village.
The debt, which is inflation linked and matures in 2069, will renovate an exist- ing property and build new rooms. Elsewhere, the social investment arm of The Big Issue has made a multi-million investment in Village
Underground, a
music venue in Hackney. Big Issue Invest’s funds will be used to develop local musical talent in East Lon- don through training programmes and renovating the venue. The Merchant Navy Officers Pension Fund has de-risked almost 2,000 of its mem- bers’ benefits after agreeing a £400m buy-in with PIC.
This follows a £1.6bn deal signed with the insurer two years ago which protected the payments of 14,000 members when it converted a longevity swap held by Pacific Life Re.
The Doncasters Section of the Triplex Lloyd Final Salary Plan has completed a £75m bulk annuity deal with Legal & General.
CALENDAR
Forthcoming portfolio institutional roundtables: March
– Sustainable bonds April
– ESG: A just transition May
– Emerging market debt June
– Private markets September
– Responsible investing October
– Defined contribution
November – 2023 outlook
The agreement secures the benefits of around 300 deferred members and 800 retirees in the scheme sponsored by the manufacturer for aerospace, gas turbine, automotive and petrochemical markets. This is the insurer’s second transaction with the sponsor following a £175m buy- out in 2018, which secured the benefits of more than 600 deferred members and 1,400 retirees. The transactions cover two sections of the plan, which are now fully insured. Heathrow Airport has secured the bene- fits of more than 1,400 of its retired work- ers following a £370m buy-in. This is Legal & General’s second de-risk- ing deal in four years with the BAA Pen- sion Scheme and has now secured the payments of almost 3,000 of its members. Legal & General has also funded an £11m buyout of the pension scheme sponsored by the Cornish Company.
Mutual Assurance
The deal concerns the benefits of more than 70 people who do or have previously worked for the farming-focused insurer in the southwest.
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