UK’s Environment Agency awards up to £240m real assets mandate to Townsend

To be part funded by assets from Aviva mandate

The £2.1bn (€2.5bn) Environment Agency Pension Fund has awarded an up to £240m ‘real assets’ mandate comprising property, infrastructure, forestry and farmland to the Townsend Group.

“We are delighted to appoint Townsend (a UNPRI signatory) for this mandate to invest in real asset funds on our behalf in accordance with the EAPF real asset investment guidelines,” said Howard Pearce, Head of Environmental Finance and Pension Fund Management at the agency.

Around £60m of the EAPF’s property assets currently managed by Aviva are to be transitioned to Townsend as part of the mandate.

The rest of the mandate will be progressively funded over next two years from the fund’s public equity and cash investments. The fund was advised by Bfinance and Mercer.

Townsend is a leading US provider of real estate advice to pension funds, foundations and endowments; it has $115bn under advice.“We aim to utilize our specialist, independent platform to construct a global portfolio, recognizing the significant opportunity to partner the Agency in raising awareness and adoption of environmental and sustainability practices across the asset classes,” said Adam Calman, Principal at the Townsend Group in London.

The appointment follows a decision taken by the fund last year to make a 12% allocation to global real assets.

It issued a request for proposal (RFP) in November last year saying it preferred to invest in real assets like energy efficient buildings, renewable energy projects, public transport, water treatment facilities, eco-friendly farming, and sustainable forestry.

It was envisaged that the portfolio would consist primarily of managed funds investing in sustainable property (c.£90m), infrastructure (c.£70m), forestry (c.£35m) and farmland (c.£35m).

Candidate fund managers were expected to show a commitment to responsible investment and assess environmental impact. A total of 25 formal expressions of interest were received, with 13 firms invited to tender.

Responsible Investor’s RI Europe 2013 conference includes a special panel session Get Real focusing on investing sustainably in real assets link for further information.