London CIV, the investment pooling company that exclusively manages Local Government Pension Scheme (LGPS) assets for all London boroughs and the City of London, has seen the value of its total pooled assets increase by 18% to £31.6bn, according to its latest Annual Report.
The biggest gains were found in the pool’s private market funds, with commitments up 26% to £3.1bn (£1.6bn drawn) over the last financial year, while public market funds saw a 20% increase in value to £15.5bn. Passive assets deemed to be pooled increased by 16% to £14.5bn.
Over the last year, London CIV has made significant developments to grow the investment pool. Key activity is highlighted below:
New funds
During 2023/24, London CIV launched three new funds across both private and public markets:
- The LCIV UK Housing Fund, which enables partner funds to invest in affordable housing across the UK, attracted investments from eight London boroughs and, in 2023 alone, committed £150m to affordable housing projects (£100m commitment into the CBRE UK Affordable Housing Fund and £50m commitment into the Octopus Affordable Housing Fund).
- In December 2023, London CIV launched its Buy & Maintain Credit Fund range (LCIV Short Duration Buy and Maintain Credit Fund and LCIV Long Duration Buy and Maintain Credit Fund) to meet Partner Funds’ demand for exposure to high quality investment grade borrowers. As of 31 March 2024, eight partner funds signed up to the fund range, with a combined investment of £952m – making the range the most successful fund launch to date for London CIV. We are now developing a LCIV All Maturities Buy & Maintain Fund, which is due to launch in August 2024.
UK investing
Other notable fund activity during 2023/24, especially around UK investing, included:
- LCIV Real Estate Long Income (RELI) Fund is 100% invested in UK real estate including hotels, student accommodation, retail units and academic buildings. Fund commitments were at £213m at 30 April 2024.
- LCIV Renewable Infrastructure Fund portfolio is 42% invested in the UK of which the majority are in wind and solar generation with a small amount of investment in batter storage, energy transmission and other clean energy initiatives. The fund size increased from £983m in December to £1.1bn at 30 April 2024.
- LCIV Infrastructure Fund is 35% invested in the UK of which approximately 70% of investments are in the renewable energy sector with the remainder in social infrastructure, transport and utilities. Fund size increased from £399m in December 2023 to £475m at 30 April 2024.
- The LCIV UK Housing Fund is 100% invested in the UK through fund of fund structures, in residential real estate across affordable homes, co-living, student accommodation and private rental. Fund size increased from £195m in December 2023 to £450m at 30 April 2024.
Fee savings
London CIV achieved annualised cost savings to investors of over £2.4m in 2023/24. In total, London CIV has achieved cumulative net savings (in respect of the ACS and passive funds) of £86.8m since 2015.
Expansion of services
Work to deliver enhanced services began with the introduction of Climate Reporting at nil cost for our partner funds in 2023. This has so far provided up to £30k in saving for each that have taken up the service (~£420k saving across the pool, as at 31 March 2024).
A Real Estate advisory service has also been developed with seed investors. This service will be particularly valuable in achieving the benefits of pooling in an asset class, which would otherwise be hard to pool in the short term due to its illiquid nature.
In June 2024 London CIV announced that Andrien Meyers, Head of Pensions Investments at the London Boroughs of Sutton and Kingston upon Thames, would take on a newly-created role as Chief Proposition Officer.
In this new role, Meyers will help create and launch a choice of products and services beyond pooling that will further strengthen the London LGPS community’s continued ability to work together and deliver a sustainable LGPS in the coming years and decades.
Dean Bowden, CEO of London CIV, said: “When I joined London CIV, first on my list was to engage with our partner funds, find out their needs and identify more ways the investment pool could be utilised for the benefit of London’s LGPS community.
“Activity during the last year has been a large step towards strengthening this community and we’re well positioned to move forward with partner funds at this key inflection point when there is a focus on accelerating LGPS pooling.”
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