South Yorkshire allocates £500 million for investment in “levelling up”

Following the success of its initial £80 million development lending commitment in South Yorkshire, South Yorkshire Pensions Authority (SYPA) is designing a place-based impact investment portfolio with a clearer focus on long-term local investment.

The portfolio will have different elements with local development lending, and housing and local venture capital allocations from the investment portfolio being wholly focused on South Yorkshire.

Other elements covering specialist housing, and traditional private equity and private debt investment will be selected for both their return and impact characteristics and SYPA will work with asset managers to direct some of their investment into South Yorkshire.

This new investment approach responds to proposals in the Levelling Up white paper that local authority pension funds should invest more in supporting the process of ‘levelling up’.

SYPA’s approach concentrates on two elements of the levelling up missions – productivity and community – where there are genuinely commercial investment opportunities.

Productivity targets the creating of well paid jobs, stimulating innovation, improving living standards, providing SME and start up finance and the use of net zero technologies.

The community element will boost the local housing stock, with improved standards for new homes, support with decarbonisation and the provision of special needs housing for the region.

The new portfolio will build up to around £500 million – around 5% of SYPA’s current fund value. The authority currently has a pipeline of more than £40 million of local investment loans for developments across South Yorkshire in 2023 to 2024.

Councillor John Mounsey, chair of the South Yorkshire Pensions Authority, said: “This approach will really help to boost our area’s economy, providing new homes, environmentally sustainable industrial developments and providing quality jobs for the community whilst allowing the authority to make the returns we need to continue to pay our members pensions each month.”