London-based asset manager Gresham House has reached a £300 million ($369 million; €330 million) final close on its British Strategic Investment Fund.
The real assets vehicle’s strategy is based on investing in sustainable housing and infrastructure projects in the UK. BSIF has so far deployed capital into wind energy project Wathegar 2, vertical farmer Fischer Farms, and has partnered with Rise Homes on a residential private rented sector project.
Heather Fleming, head of institutional development at Gresham House told Agri Investor the fund’s investments “vary considerably in terms of the nature of the business activity and the opportunities we have to influence board and management attitudes.” She said this was why a differentiated approach has been taken to achieving social and environmental impact – another key theme of the fund’s strategy.
Fleming added: “For example, within vertical farming, the sustainability drivers we look at include improved security of food supply with UK-based production, reduced water usage and no pesticides, efficient use of land and the ability to harvest all year round and reduced food miles, meaning a reduction in the carbon emissions usually generated by the transportation of produce from the farm to the end consumer.”
She said the fund’s allocation to the subsectors in which it invests will be guided by constraints designed to create appropriate levels of diversification, though she did not disclose any values.
The 2017 vintage vehicle is targeting a net IRR of 8-10 percent and a 3-5 percent yield. It was anchored by the Royal County of Berkshire Pension Fund and Teesside Pension Fund. Other institutional investors to commit to the strategy include Worcestershire Pension Fund, the Greater Gwent Pension Fund, the West Midlands Pension Fund and the Greater London Authority’s London Strategic Reserve Fund.
Gresham House confirmed that two of these LPs had established local co-investment portfolios, “allowing them to increase exposure to areas of specific interest within specified regional locations.”
BSIF will not invest in forestry, a longstanding investment class for Gresham House. However, Fleming said that “due to growing demand for diversified real asset strategies which include forestry,” this is something the firm is “considering as a new strategy.”
Forestry acquisitions will focus on the UK, the EU, New Zealand, Australia, the US and Canada. The potential for building scale will also be a key aim, she added.