Brunel’s innovative infrastructure offering evolves for Cycle 2 rollout

Sofia Deambrosi, Investment Officer, Brunel Pension Partnership
Sofia Deambrosi
Investment Principal
18th November 2020

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We are delighted to announce the successful launch of the Cycle 2 Brunel Infrastructure Portfolio, with the establishment of two new investment vehicles dedicated to primary funds as well as tactical co-investment and secondary opportunities.

Brunel is one of eight pooled Local Government Pension Scheme funds in the UK. Since 2018, Brunel has secured over £1.3 billion of commitments to infrastructure investment across two ‘cycles’ as it continues to develop new opportunities for its Clients.

“Our clients asked us to provide them flexibility to invest to meet their individual infrastructure objectives” said Richard Fanshawe, Head of Private Markets at Brunel. “In partnership with StepStone, we found an innovative way to make that happen whilst delivering the pooling objectives Across Cycles 1 and 2 respectively, 40%-plus and 50% of commitments will go into the clean energy transition.”

We believe it is crucial that investment is directed towards sustainable projects globally, to achieve the long-term objectives of our clients, support economic growth and work towards achieving the UN Sustainable Development Goals. Thanks to LGPS pooling and the appointment of StepStone Infrastructure and Real Assets (SIRA), our clients benefit from resilience to sustain net return outcomes whilst diversifying their exposure to assets, sectors and asset managers. A significant bonus of this arrangement is that our clients now benefit from two sources of scale advantage in fee and term negotiations – LGPS aggregation and StepStone aggregation. They also benefit from the might of a global infrastructure team to co-invest.

Build back better 

Brunel has now established two SIRA investment vehicles to deploy its Cycle 2 capital: a £470 million fund focused on renewable energy opportunities and a separate £370 million ‘generalist’ fund to invest into transport, telecoms, heating and power as well as other sustainable infrastructure. The clean energy transition does not stop at the power sector; it extends throughout all of society. Our clients want to be part of that wider societal solution.

Such focus fits with Brunel’s Climate Change Policy and Responsible Investment principles, making Infrastructure a crucial plank in helping our clients to build Paris-aligned portfolios.

The Cycle 2 renewables vehicle has already made three primary fund commitments with three leading managers:

  • Capital Dynamics Clean Energy Infrastructure Fund X
  • Copenhagen Infrastructure Partners IV
  • Brookfield Asset Management IV Renewable Sidecar

The focus is clear: clean energy generation, storage and energy transition-enabling assets.

We want managers who are raising the bar in their industries, in terms of technology, solutions, responsibility and sustainability. Capital Dynamics’ involvement in Switch’s Gigawatt 1 project in the US (Cycle 1) is a great example of this, building back sustainably from the Covid crisis.

Brunel’s Cycle 2 vehicles build on the fully committed Cycle 1 portfolio, which has made 7 primary fund commitments and 1 tactical investment so far. Deployment is on track and the portfolio was well positioned going into the Covid-19 crisis.

The Cycle 1 primary fund commitments include the following managers: Arcus, Basalt, Capital Dynamics, Macquarie, NTR and Vauban.

David Beamish, Principal, StepStone Infrastructure & Real Assets, said:
“We are delighted to continue our partnership with Brunel and support their Cycle 2 Infrastructure programme. In line with Brunel’s objectives, we will continue to target responsible investing with a clear focus on sustainability and climate change as well as other considerations, especially during the challenges of Covid-19. In line with Cycle 1, we remain focused on working closely with the Brunel team to access the best opportunities and partners in the market to provide long term, sustainable value for Brunel’s clients.”

 

Headline picture shows Springbok, a 448 Megawatt-dc solar development in Kern County, California, one of the largest solar developments in the world. The fund is invested, through Cycle 1, in the development through the Capital Dynamics Clean Energy Infrastructure VII fund


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