LONDON Feb 20 Britain's three billion pound
($3.74 billion) Environment Agency Pension Fund (EAPF) is
looking to raise its allocation to high-yielding infrastructure
projects to 7 percent from 5 percent, its chief investment
officer Mark Mansley said on Monday.
Mansley, who was speaking to Reuters on the sidelines of a
conference, declined to give a specific timing for the possible
adoption of the new target.
Governments are eager for long-term investors to put money
into new infrastructure projects such as alternative energy,
bridges or roads.
But investors, who generally only invest a small amount of
their portfolios in these alternative assets, are often
reluctant to take on "greenfield" schemes, which include
However, the EAPF is starting to explore direct investments
and the possibility of taking some construction risk, perhaps
for onshore wind farms or solar power projects, which can be
erected relatively quickly, Mansley added.
"Investing in greenfield projects can be quite a rewarding
area, taking them through to completion, holding them for the
next 25 years or selling them if the market is still over-rich,"
he said. "The key thing is having good partners who know how to
mitigate the construction risk."
The fund, which has a strong focus on responsible and
sustainable investment, currently invests mainly through pooled
funds such as Copenhagen Infrastructure II K/S, which has made
an investment in British biomass-fired power plant project
Mansley told the Stirling Infrastructure Partners conference
in London that at one level infrastructure was becoming a
crowded trade: "There are lots of people chasing lots of deals
... Prices are getting squeezed. As an investor you have to be
careful about where you want to be."
As a result, he said the fund was moving away slightly from
some of its core infrastructure equity exposure, which was
looking quite expensive.
Demand for infrastructure equity in developed markets has
rapidly outstripped supply, prompting investors to bid up prices
to get access to the choicest assets.
Mansley said he was a "slight sceptic on size" and it might
pay for investors to look at smaller projects, where the EAPF
had made a number of investments.
"The 1 billion pound projects are the popular ones," said
Mansley. "But in the hundreds of millions size, the queues are
less long and the prices are a bit more attractive."
($1 = 0.8026 pounds)
(Reporting by Claire Milhench; Editing by Gareth Jones)