Lancs claims a first for wind farm investment

Lancashire County Pension Fund (LCPF) has announced a direct investment – understood to be between £120m and £170m – in Portuguese wind generation.

The deal is the first significant direct infrastructure investment by the fund, and comes six months after it lost out in its attempt to buy the UK government’s stake in Eurostar.

The deal is with EDF Energies Nouvelles to acquire a significant minority equity stake in the firm’s wind assets in the country.

Mike Jensen, chief investment officer at LCPF told Room151: “We are fairly confident that we are the first LGPS fund to invest directly in a non-UK asset platform of this type.”

“The Eurostar bid was extremely educational from our point of view and helped raise our profile with sellers of assets looking for UK partners.”

Jensen said that the fund had been alerted to the tender through financial advisers it had used during the Eurostar bid.

He would not confirm the exact amount of the investment or the expected returns other than to say that they beat the fund’s minimum investment return for infrastructure investments of 8% per year. The deal has been signed but is still subject to regulatory approval, expected within the next month.

Jensen added that the link up now meant that LCPF was now in EDF’s strategic partner list which could lead to further investments in the future.

He will also look to diversify its infrastructure portfolio to invest in transmission grids, airports and rail infrastructure, as well as social infrastructure such as housing.

He added that the fund was talking to Canadian public sector pension funds about launching joint bids for infrastructure assets in future.

“We made it clear that we wanted to make direct infrastructure investments and after we missed out on the Eurostar deal some were questioning whether we could walk the walk.

“This deal is proof of concept and will hopefully be the first of many similar deals.”

LCPF was advised by Santander Corporate & Investment Banking (France & Portugal) and Uría Menéndez – Proença De Carvalho.

The fund, with assets under management of £5.5bn at 31 December 2014, is one of the largest funds in the LGPS in the UK.

In July 2015, LCPF announced a strategic partnership with London Pension Fund Authority to pool their assets into a single investment vehicle exceeding £10bn.

Photo (cropped): .Marton, Flickr.