Hermes Investment Management, through Hermes Infrastructure, has held a £1.16 billion (US$1.82 billion) final close for the Hermes GPE Infrastructure Fund (HIF).
HIF has raised a total of £1.16 billion, with the fund itself raising £1.0 billion exceeding its £800 million target. Hermes Infrastructure now manages funds of £3.1 billion, including a £2 billion direct investment managed account programme for the BT Pension Scheme, one of the UK's largest occupational pension schemes.
HIF has 18 investors in total, including large European corporate pension schemes (c60% of the funds raised), as well as six UK local government pension scheme (LGPS) investors who collectively account for c30% of the fund. Foundations account for the remaining c10%. The final close included top up commitments from certain early stage investors, as well as commitments from nine new investors.
Peter Hofbauer, Head of Hermes Infrastructure, stated:
"We are pleased to have raised HIF from a varied and prestigious group of investors. As one of only a few UK-based- and-focused direct infrastructure investors, HIF offers exposure to high quality UK infrastructure assets which can deliver excellent investment characteristics for institutional investors. We will look to continue to target long-term stable, inflation linked infrastructure investments for our clients and apply best in class governance to these assets in order to deliver superior risk-adjusted returns."
Jonathan Bunt, Chief Financial Officer, London Borough of Barking and Dagenham Pension Fund (LBBD), commented:
"We invest in infrastructure to diversify our portfolio and gain access to long term, stable cash flows that help match our pension liabilities. LBBD was an early investor in HIF in 2012 and increased its commitment at the final close on the back of strong performance to date. An additional attraction of this particular Fund has been the pooling arrangement in place for LGPS investors, which allows us to achieve meaningful fee discounts on a collective basis."
Hermes Infrastructure currently manage a portfolio of 13 investments comprised of nine assets in the renewable, utilities, ports and transport sectors, as well as four infrastructure fund investments. In March 2015, Hermes Infrastructure announced its intention to acquire stakes in Eurostar, the high-speed rail service and Associated British Ports, the UK's leading ports group in consortium with Caisse de dépôt et placement du Québec (CDPQ) and Canada Pension Plan Investment Board (CPPIB) respectively. Both transactions are due to complete mid-2015.