UK pension funds’ impact investment initiative to have second round

The new £250m (€295m) ‘Investing4Growth’ (I4G) impact investing scheme being run by five UK local government pension funds is currently at the due diligence stage on three potential investments that will see it deploy around £100m in a first round of investment.
The initiative, launched last year by the Greater Manchester, West and South Yorkshire, West Midlands and Merseyside funds, has whittled down the candidates from seven short-listed investment proposals, as RI reported in December.
The idea is to hire asset managers to deliver both financial returns and create a positive economic, social or environmental impact. In total I4G had submissions from 28 managers.
One manager in the frame is understood to be Boost & Co., the London-based manager with £160m under management, which provides loans to small and medium-sized enterprises. A final announcement on the awards is set for the end of April.
Brian Bailey, the former Director of Pensions at West Midlands and current chair of governance firm PIRC who is heading up the initiative, acknowledged that a lot of lessons has been learnt during the start-up phase of the process – and that there will be an Investing4Growth “Mark 2”
“We’ve learnt lots of good things from this exercise,” he said at a seminar organised by PIRC last week.Kieran Quinn, the head of the £12bn Greater Manchester Pension Fund who also chairs the Local Authority Pension Fund Forum (LAPFF), hinted at issues around bureaucracy and flexibility at the funds. So there would be another round – “and, yes, it is going to give us a return”.

“We’ve learnt lots of good things from this exercise”

Elsewhere in the UK, the Investor Forum – a key recommendation from 2012’s Kay Review into market short-termism – is set for launch in July.

It follows a report by a working group, headed by Sacha Sadan, Director of Corporate Governance at Legal & General Investment Management, that the body should be practitioner-led and independent of trade associations.

The idea is that it would engender a partnership between asset owners, asset managers and companies to increase the focus on long-termism. It would also form what are termed ‘Engagement Action Groups’ to work with companies.

A formal constitution of the forum is under development and it’s hoped it will “have legal existence” by the end of June. A shortlist of candidates to head the forum has been drawn up and work is underway in identifying a chairman and other members of its governing body.