The Royal County of Berkshire Pension Fund is set to take a 20% shareholding worth £8.2m in Gresham House alongside plans to invest in the asset manager's new alternative investment fund.
It is part of Berkshire's plans to have a long-term strategic relationship with Gresham House in order to develop investments in alternative and illiquid assets, into which the new local government pools are expected to expand.
Subject to the passing of resolutions at Gresham's annual general meeting in March, Berkshire has committed to subscribe for up to 2,546,372 new ordinary subscription shares at 325 pence each in return for making a significant cash injection into the company.
It comes as the company announced it would be launching a platform to allow both large pension funds and pools from across the private and public sectors to access niche alternative and local impact investments.
The first fund on the platform will be the British Strategic Investment Fund, which will focus on renewable infrastructure, housing and innovation. Berkshire will be the cornerstone investor in this fund, which has a target size of £300m and will be managed by Gresham House Asset Management (GHAM). After seeking shareholder approval on 10 March, the fund is expected to be launched later this year with further announcements to be made in due course.
Berkshire had been seeking a strategic partnership with a specialist asset manager to support its long-term investment objectives.
Chairman of the Berkshire Pension Fund and its advisory panels John Lenton said in a statement:
"We are delighted to be working with Gresham House in developing investments in alternative and illiquid assets. This platform will enable us to reduce costs and obtain diversity in our investments.
"We will be targeting niche areas and make investments which are smaller and usually longer term than those that interest the major investment houses. These give us the potential of a higher long-term return which is so important to a pension fund like ours which has to plan for pensions that will be drawn down many years in the future.
"We are particularly pleased to be a cornerstone investor in the Gresham House British Strategic Investment Fund and the ability it gives us to invest in themes identified by the chancellor as being worthy of support."
According to the company's announcement, initial discussions with a limited number of local government pension schemes (LGPS) have confirmed interest in the platform's objectives.
Gresham House sees huge potential from the creation of the LGPS pools and the government's desire for them to inject investment into UK infrastructure and housing projects. The company pointed out it may become uneconomical for the pools to monitor and manage individual investments below the value of £25m-£50m.
Berkshire's planned stake in the company will also need to be approved by the Financial Conduct Authority because of the indirect interest it will acquire in GHAM.
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