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UK’s pension fund-backed Dalmore Capital mulls entry into nuclear

Infra specialist counts Railpen, Strathclyde and the Pension Protection Fund among clients

UK pension funds may be set to go nuclear as infrastructure fund manager, Dalmore Capital, confirms it held talks with EDF about financing its proposed nuclear plant in the east of England.
Toby Belsom, Head of Investor Research at UK campaign group, Shareaction, responded to the talks with the French state-owned utility by cautioning institutional investors to “think long and hard” about such investments. “Putting aside the pros and cons of nuclear power, the upfront infrastructure investment required for nuclear power developments is clearly eye-watering”. He warned that the threat posed by technological and regulatory changes over the life span of such projects, meant “capital is better deployed in energy efficiency schemes and more diversified renewable energy projects”.
This comes as the Dutch government faces pressure from several political parties to ask ABP, its civil service pension scheme, to sell its investments in Engie over concerns about the French energy utility firm’s two ageing nuclear power plants in Belgium. Both the Tihange and Doel plants have closed due to security incidents in recent years. ABP, however, has stated that it prefers engagement on the issue, stating on its website: “When we sell our shares, we have lost contact with Engie and with it our influence”.
London-based Dalmore Capital, which claims to offer UK institutional investors access to “lower volatility” infrastructure assets, was the fund manager behind the Pensions Infrastructure Platform’s (PiP) first fund in 2014, the PPP Equity PIP Limited Partnership.
PiP is the UK’s infrastructure investment platform for pension funds, it was set up in 2014 by UK trade body NAPF (now the Pensions and Lifetime Saving Association, PLSA).
Its PPP Equity PIP Limited Partnership fund saw founding investments from UK pension funds, including: British Airways Pensions, Pension Protection Fund, Railpen, Strathclyde Pension Fund and West Midlands Pension Fund.
In 2016, IPE reported that Mike Weston, Chief Executive of PiP had called on the UK Government to consider tapping pension funds to finance a nuclear power plant in North Wales.
Speaking about the proposed Sizewell C nuclear plant, Simone Rossi, EDF’s recently-appointed CEO, reportedly said there was “strong appetite” from pension funds and other institutional investors for the long-term, reliable returns available from nuclear power projects.A spokesperson for Dalmore told RI that the “early-stage talks” with EDF are still “very conceptual in nature”. “Dalmore Capital are in discussions with EDF on a range of topics, similarly with the Government… We are a big investor in infrastructure assets so these conversations are part of a broader discussion about what works for investors”. He added any decision it takes follows informed discussions with its investors.
RI asked the Universities Superannuation Scheme (USS) – which last year partnered with Australian infrastructure giant Macquarie to buy the UK’s state-owned Green Investment Bank – if it had a policy on nuclear energy, and if it had invested in any of Dalmore’s three funds. It declined to comment.
Micheal Marshall, Responsible Investment Officer at the West Midlands Pension Fund told RI that it was still “involved in Dalmore’s first fund, PPP Equity PIP LP”, but that “the fund is not associated in any way with Sizewell, nor the nuclear sector more broadly”.
Ian Jamieson, Investment Manager at the Strathclyde Pension Fund, said that it was still invested in the PPP Equity PIP LP fund but that it “was not aware of any discussions Dalmore Capital may be having in respect of this or any other potential investments”.
Neither fund commented on whether they had any investment restrictions on nuclear energy.

One senior figure in the renewables development sector said quite simply “why would you?” invest in Hinkley Point.

Caroline Escott, Policy Lead for Investment and Defined Benefit at the PLSA, told RI that “no members have come to us for advice on investment in nuclear energy” but added, due to “the current economic and financial uncertainty…pension funds are increasingly looking to protect the value of capital through diversifying into other asset classes”.
Greenpeace highlighted recent problems with EDF’s Hinkley Point nuclear power plant – the first to be built in the UK since the 1990s – which it said had been “plagued by delays and is running massively over budget”. A spokesperson told RI, that investors were “clearly looking for infrastructure investments to hedge against potential corrections in the equity markets, but nuclear power is a demonstrably poor choice, when examined through either an environmental or financial lens”.