Mike Weston, the man in charge of UK pension funds' new not-for-proft infrastructure vehicle, has recently announced a new model to invest the money contributed by pension funds to the Pensions Infrastructure Platform (PIP).
Pension funds have earmarked £330 million for the first fund, raised in conjunction with asset manager Dalmore Capital, and of that, £220 million has so far been invested in a range of social infrastructure assets.
Mike Weston said that PIP's next plans are to launch two more funds, investing in renewable energy and in infrastructure debt. He mentioned that they will probably hire a fund manager for these fund but, in the long term, he expects that PIP will be managing its own money.
Mr. Weston said that they plan to seek authorisation from the FCA to be an asset manager, and wants to hire staff in operations and in frontline infrastructure management.
The model for the PIP's approach is IFM Investors, owned by 30 Australian pension funds. Weston said:
"Once we recover the costs and build up a financial buffer, then any surplus will be returned to investors through lower fees. That's the IFM type model: just recycling the surplus."
It is an approach that is gaining traction among pension investors worldwide. We recently announced that the California State Teachers' Retirement System is currently working on putting together a new infrastructure investment consortium taking in other pension funds.
Meanwhile, in Switzerland this summer, five pension funds committed Sfr300 million ($315 million) to a new not-for-profit infrastructure fund run by the IST Investment Foundation.
"At some point, it might be that we co-operate internationally."