Room151’s LGPS Briefing
Private Markets Profile, Q1, 2023
This report was sponsored by Alpha Real Capital , Franklin Templeton & Igneo Infrastructure Partners
The LGPS has a long and arguably successful history of investing in listed securities, and while direct real estate has also played a significant role in portfolios reaching back decades, most illiquid and unlisted opportunities remain relatively untapped by the scheme, when compared to many global institutional investors.
In the last ten years a number of political, investment and environmental drivers have moved LGPS asset allocators to rethink this. Firstly, there is the need to explore alternatives to long-term returns for open defined-benefit schemes. The old 60/40 orthodoxy that served administering authorities reasonably well, is now viewed by many as outdated or at least in need of modification, with an allocation to private assets needed to round the portfolio even if they are equity and fixed income in nature.
EVENTS: Room151 LGPS Conferences & Net Zero Investor Conferences
Secondly, there is pooling, the defining drivers of which were to achieve economies of scale and access more private opportunities, such as infrastructure, where size matters. Most administering authorities didn’t have sufficient clout in isolation but now they do, in aggregate.
Thirdly, there are net zero and impact. The LGPS as a global investor has signed up to Paris-alignment with zeal, which likely means more private markets activity than ever if funds are to access long-term drivers or decarbonisation, such as energy transition infrastructure. While the LGPS as a local investor – potentially allocating up to 5% in UK-wide ‘local’ investments – may also see private markets opportunities lend themselves more readily to this classification.
LGPS pools dealt efficiently with listed securities, but it’s ultimate success may be won or lost…{Download the Report}
To discuss sponsored thought leadership on www.room151.co.uk or www.netzeroinvestor.net contact peter.braham@room151.co.uk.
