LGPS Pool LPPI to Introduce a New Investment Fund Focused on Environmental Opportunities
New Environment Opportunities Fund Launching by LPPI in Spring 2023
The Local Pensions Partnership (LPP), a £26.3bn investment pool, is set to break tradition with the launch of its new Environment Opportunities Fund (EOF) early next year. The fund, a multi-strategy private markets vehicle, is designed to capitalize on opportunities presented by the global energy transition towards net zero.
Tomlinson, the investment manager for LPP, has hinted that the target size of the EOF will be "meaningful." The fund will be managed in-house by LPPI's 70-person strong investment team, with a focus on infrastructure and private equity. However, it may expand into other asset classes like private credit over time.
Unlike some LGPS Pools, LPPI has significant in-house private markets capacity. This capacity will be leveraged for the EOF, which will operate as a separate entity from the broader LPPI platform. The mandate for the EOF is designed with flexibility, initially encompassing fund-based investments.
The EOF is a response to increasing demand from clients committed to net zero targets. LPPI's clients, including those part of the Institutional Investor Group on Climate Change (IIGCC), have expressed a growing interest in investing in climate solutions directly. The new fund aims to address this demand by expanding into co-investments and potentially direct investments over time.
The EOF will build on LPPI's existing private markets expertise, which it has been developing since 2016. LPPI has managed significant capital across infrastructure, private equity, and credit strategies since then.
The LPP pool was launched in 2016 as a collaboration between the Lancashire County Council (LCC) and London Pensions Fund Authority (LPFA). Historically, the LPP pool has left asset allocation in the hands of its partner funds. However, the launch of the EOF signals a shift away from this tradition.
The search results do not provide information about the institution or person responsible for managing the EOF by LPPI starting next spring. Tomlinson expects the exposure to private credit to remain limited, and the fund will initially focus on infrastructure and private equity.
With the EOF, LPPI intends to directly invest in climate solutions, beyond just having investments with good Environmental, Social, and Governance (ESG) characteristics. The fund is designed to capitalize on opportunities arising from the global transition towards net zero, making it an exciting venture for those interested in sustainable investing.
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