The Greater Manchester Pension Fund and London Pensions Fund Authority have agreed to form a joint venture to invest £500m in infrastructure projects.
The funds, which are two of the largest local government pension schemes in the country, said the move will return long-term returns that match their liabilities while providing much-needed investment for developments.
They will look to make investments over the next three to four years. the focus will be mainly on Greater Manchester and London, although the funds said there is a “high degree of flexibility” for exploring opportunities further afield.
GMPF chair Cllr Kieran Quinn said: “We are delighted to have formed this partnership alongside LPFA. In the UK we are only beginning to realise the potential for public pension funds to support the development of infrastructure projects, at the same time as delivering sustainable, high-quality returns to scheme members and employers.
“GMPF are long-standing investors in infrastructure and we look forwarded to using our experience and knowledge to help build this into something of great value to the UK as a whole, with an initial focus on Greater Manchester and London, which are two key areas in driving growth.”
Susan Martin, chief executive of the LPFA, added: “The creation of an infrastructure investment platform is another step towards closing our deficit.
“To meet our pensions liabilities, we need a balanced portfolio that includes assets with a long-term profile. At the same time, by focusing on British infrastructure we are investing in an area that so badly needs it.
“We look forward to working with GMPF to deliver projects that will provide both for our members and at the same time support the wider social need.”