Border to Coast launches UK strategy in major private markets push

Border to Coast Pensions Partnership has officially launched an innovative £500 million UK Opportunities strategy targeting private markets assets.

The strategy is specifically targeting UK “productive finance assets”, in line with the government’s Mansion House objectives.

In a press release, Border to Coast said the portfolio would focus on “long-term investment into the UK economy” through purchasing assets such as new-build housing, commercial properties, regeneration projects, renewable energy, grid infrastructure, and finance for early stage and growth companies.

It will also target “additionality”, the pool said, by “financing new projects that are also expected to add value to the local and wider UK economy”.

The new strategy was recognised at Pensions Expert’s Innovation Awards, with Border to Coast taking two prizes for the concept at a ceremony in London on 1 May.

Joe McDonnell, chief investment officer at Border to Coast, said the proposition was “innovative” and “unique” due to the wide range of assets it aims to invest in. It has already received £500 million in commitments from Border to Coast’s client funds.

Major private markets expansion
The new launch forms part of a major new push into private markets from Border to Coast and its Local Government Pension Scheme (LGPS) clients.

In total, the 11 LGPS funds within the Border to Coast pool committed £3.6 billion to various strategies in April this year, including the UK Opportunities strategy and a new Climate Opportunities offering.

This is the second climate-themed private markets strategy the pool has launched this time raising £1.2 billion to invest in “projects that support the journey to net-zero carbon emissions”, Border to Coast said.

The first Climate Opportunities fund was launched in 2022 and raised £1.4 billion.

In addition, Border to Coast also reported £740 million in new infrastructure commitments, plus total investments of £395 million into private equity and £797.5 million into private credit.

The new commitments mean Border to Coast’s private markets programme has raised £16 billion from its LGPS funds in five years – more than a quarter of all assets managed by the 11 funds in the pool. Of this, £12 billion has been deployed.

The pool estimates that it has achieved a 28% reduction in fees for its partner funds against alternative options due to Border to Coast’s scale and implementation processes.

McDonnell said: “The success of our private markets programme to date is testament to the significant benefits pooling continues to bring to the table.

“Our collective scale and strong alignment with our partner funds’ needs has resulted in not only sizeable fee reductions and greater potential for attractive long-term returns, but also access to a broader range of global investments, the development of strategic partnerships with UK and global asset managers, and the ability to focus investment into areas such as climate solutions.”

He also highlighted the internal team’s proprietary research and portfolio management capabilities.