Consultants have been appointed to work up proposals for a property and infrastructure vehicle to pool investments from some, or all, of Scotland’s 11 Local Government Pension Scheme funds.
Scottish Futures Trust (SFT), the independent body responsible for delivering value for money in public sector infrastructure investment, has announced the appointment of CBRE Indirect Investment Services to report on potential options for the investment vehicle.
According to tender documents CBRE is expected to report by May.
The documents said: “It is recognised that these classes of investment, particularly infrastructure, account for a relatively low proportion of each fund’s investment strategy and that investment in Scotland as a geography narrows this further.
“However, SFT is aware of the potential for Scottish deal flow and opportunities requiring external finance, particularly for commercial real estate.
“There is an identifiable gap and investment opportunity for development finance and, in some cases, for longer-term investment in the completed asset.”
The consultants have been directed to examine the legal, statutory and regulatory regime that would guide investment decision making by the new pool.
The report will also consider appropriate mechanisms for pooling funds, including potential legal structures and the scale of opportunity.
Another part of the work will include working up a process for agreeing a joint investment strategy that “is sufficiently clear and legally robust, and yet flexible enough to respond to market opportunities as they arise”.
CBRE will also outline appropriate mechanisms for deploying funds, which could “accommodate and benefit from partnership working with local authorities (or other public bodies) where they wish to invest alongside the LGPS on local opportunities”.
Finally, the report will cover the “potential costs and timeframe associated with the options to establish a collective investment vehicle”.
SFT’s tender calls for the production of an interim report by March, with a final report by May, which will be “suitable for sharing with key stakeholders, including the LGPS and Scottish Government.”
Last year, The Sunday Times reported that the Scottish National Party’s growth commission — which is yet to be released — would recommend an LGPS pooling vehicle aimed at providing affordable housing.
Ian Blackford, the SNP’s leader in Westminster, was quoted as saying: “Pooling and leveraging local authority pension fund assets to invest in infrastructure will help create the architecture for investment that Scotland needs right now.
“Investment in infrastructure is key to improving productivity and GDP. Housing is central to that ambition, along with transport, and digital.”
The tender documents make no specific mention of affordable housing.
