LGPS pool set to debut Environment Opportunities Fund focused on eco-friendly investments

The Local Pensions Partnership (LPP), an investment manager for the £26.3bn Local Government Pension Scheme (LGPS) pool, is set to launch a new fund focused on climate opportunities. Known as the Environment Opportunities Fund, the initiative is a response to the growing demand from clients committed to net zero targets.

The fund, due to launch early next year, is a multi-strategy private markets vehicle designed to capitalise on opportunities presented by the global energy transition. Unlike some LGPS pools, the LPP pool has significant in-house private markets capacity, allowing for a more direct approach to investments.

The Environment Opportunities Fund will be managed in-house by LPPI's 70-person strong investment team. Clients investing in the fund are signatories to the Institutional Investor Group on Climate Change (IIGCC), demonstrating their commitment to sustainable investing.

In its early stages, the fund will focus on infrastructure and private equity, but may expand into other asset classes like private credit. Notably, the exposure to private credit is expected to remain limited in the Environment Opportunities Fund.

LPPI has managed significant capital across infrastructure, private equity, and credit strategies since 2016. The firm has a collaboration with Infrastructure platform GLIL for renewable energy infrastructure commitments, further bolstering its capabilities in the sustainable investment space.

The launch of this thematic multi-asset strategy marks a shift for the LGPS pool, as it has traditionally left asset allocation in the hands of its partner funds. The mandate for the Environment Opportunities Fund is designed with flexibility, initially encompassing fund-based investments and set to expand into co-investments and potentially direct investments.

The financial component is a significant part of the new fund's intent, but there is a subtle difference. The Environment Opportunities Fund has a direct intentionality to invest in climate solutions, aligning with the growing global focus on combating climate change.

The target size for the Environment Opportunities Fund has yet to be disclosed, but it will be "meaningful." The fund is being managed by EB - Sustainable Investment Management GmbH, based in Kassel, Germany, which was appointed as the fund manager and is responsible for the daily asset management under the supervision of the management company. However, the official launch date of the fund is not specified in the provided documents.

The LPP pool was launched in 2016 as a collaboration between the Lancashire County Council (LCC) and London Pensions Fund Authority (LPFA). The new fund is expected to further strengthen the LPP's position as a leading sustainable investment manager within the LGPS.

LGPS pool set to debut Environment Opportunities Fund focused on eco-friendly investments