British Strategic Investment Fund

 

The British Strategic Investment Fund (BSIF) held a first close on 16 June 2017 with £150 million commitments raised from two Local Government Pension Schemes. BSIF is the first Gresham House fund on the newly formed Long-Term Investment Solutions Platform established to deploy long-term or ‘patient’ capital while providing an opportunity for co-investment.

BSIF targets annual returns of 8.0-10.0% from investing in UK Housing and Infrastructure assets with a target income yield of 3.0-5.0% per annum. The fund will focus on generating sustainable and attractive returns in a cost-effective manner from investment in these important sectors. The fund is designed for institutional investors including local authority and corporate pension funds, endowments and family offices.

BSIF will aim to bridge the gap between investors’ investment goals and the need for longer-term investment into key UK sectors, whilst aiming to deliver a positive social impact. Investors will benefit from enhanced due diligence, transparency and corporate governance in line with best practice. Importantly, the fund will focus on the extensive universe of potential investments typically below a £50.0 million threshold size and will involve development finance alongside established ‘brownfield’ investments. Such investments may provide platforms for scaling.

The deal-by-deal co-investment structure will allow investors to increase their allocation to underlying community-based transactions or themes of specific interest. It is an explicit objective to “partner” with local authorities and local government pension schemes to fulfil both financial, social returns, and potentially to support local area objectives.

Infrastructure:

The “building blocks” for supporting UK economic activity

Housing:

Addressing a long-term supply/demand imbalance

The Benefits of the BISF Fund

    Attractive sector dynamics

    Downside protection

    Attractive investment fundamentals

    Positive social impact

    Highly experienced investment team

    Cost-effective direct investment

    Transparency

Summary Fund Characteristics

The fund will aim to develop a diversified portfolio that is characterised by:

Longer term superior returns

BSIF is targeting returns of 8-10% net. per annum over the life of the fund including a 3-5% income yield (following the end of the fund’s Investment Period defined below).

Visible, inflation related cash flows

The investment sectors have historically correlated positively with inflation and often have long-term visibility of future inflation-linked cash flow streams from contractual arrangements.

Relative stability

BSIF investments will predominantly be private, reducing LPs exposure to short term price volatility from listed securities.

Diversification

There will be constraints to ensure that the fund builds a diversified portfolio across a range of both Housing and Infrastructure projects.

Exposure/allocation discretion

The deal-by-deal co-investment structure will allow LPs to increase their allocation to underlying transactions or themes of specific interest. This also allows investors to increase exposure to regional or community based investment.

Double bottom line returns

The social and economic impact created by investing in the investment sectors have remained a focus for UK policy makers, councils and governments, however their funding, resources and other capabilities are significantly constrained to address these objectives. BSIF investments in the sectors can help to deliver these non-financial benefits to the UK economy in addition to the investment returns.

Capital allocation and investment decisions are made by an experienced Investment Committee with over 120 years of experience.

For further details on the fund and the investment opportunity please contact Michael or Joe, details below.

Michael Hart
020 3837 5908
m.hart@greshamhouse.com

Joe Thomas
020 3903 0556
j.thomas@greshamhouse.com