LGPS Pension Pool Intends to Launch a New Fund Focused on Environmental Investments: LPPI Edition

LPPI Announces New Environment Opportunities Fund

The Local Pensions Partnership (LPP), a £26.3bn pool managed by LPPI, has announced the creation of a new fund focused on climate solutions: the Environment Opportunities Fund. The size of the fund has yet to be disclosed, but Tomlinson, LPP's Chief Executive, hints that it will be "meaningful."

The Environment Opportunities Fund will build upon LPPI's existing capabilities in private market investing, leveraging its success in strategies such as infrastructure, private equity, and credit. Notably, LPPI has collaborated with Infrastructure platform GLIL for some commitments to renewable energy infrastructure.

The LPP pool, launched in 2016 as a collaboration between the Lancashire County Council (LCC) and London Pensions Fund Authority (LPFA), traditionally left asset allocation in the hands of its partner funds. However, with the Environment Opportunities Fund, LPPI intends to take a more active role, directly investing in climate solutions as opposed to just having investments with good Environmental, Social, and Governance (ESG) characteristics.

Unlike some LGPS Pools, the LPP pool has significant in-house private markets capacity, and the Environment Opportunities Fund will be managed in-house by LPPI's 70-person strong investment team. The mandate for the fund is designed with flexibility, initially encompassing fund-based investments and set to expand into co-investments and direct investments over time.

The new fund is largely a response to increasing demand from clients committed to net zero targets. It aims to capitalize on opportunities arising from the global transition towards net zero, focusing on infrastructure and private equity in its early stages but potentially expanding into other asset classes like private credit. The fund, a multi-strategy private markets vehicle, is due to launch early next year and signals a shift away from the LPP pool's traditional approach.

In addition, it's worth noting that the clients of LPPI are members of the Institutional Investor Group on Climate Change (IIGCC), further emphasizing their commitment to climate protection. The fund also aligns with the efforts of the institution developing and managing the new multi-strategy Private Markets fund with a focus on climate protection planning: Allianz Global Investors.

The Environment Opportunities Fund is designed to capitalize on opportunities presented by the global energy transition. As LPPI continues to grow and adapt, it's clear that the organization remains dedicated to investing in a sustainable future.

LGPS Pension Pool Intends to Launch a New Fund Focused on Environmental Investments: LPPI Edition