Pip targets 'money in the ground' by year-end

It was reported earlier this year that the 10 founding members of the initiative launched by the National Association of Pension Funds and the Pension Protection Fund were discussing whether the fund should be managed internally or externally, and whether construction risk should be accepted.

“We have made a huge amount of progress in developing the Pip over the past few months,” Joanne Segars, chief executive of the NAPF, said at the organisation's annual conference.

The platform has been through an extensive manager selection exercise which is expected to come to an end soon, she added: “We hope to have money in the ground by the end of the year." Segars said the fund will not have a private equity-like structure and will be a long-term vehicle.

Alan Rubenstein, chief executive officer of the PPF, said: “The idea is that people will subscribe to the fund, it will be a closed-end fund and there will be a secondary market created for people to be able to trade on a best-endeavours basis – but there is no guarantee, so investors are committing for the long term."

The fund will have a minimum 10-year fund life. “We just don't know how infrastructure will develop and it may well be that in 10 years the opportunities are gone,” he said.

The fund will be predominately UK-focused to reflect the perception that schemes are keen for inflation-linked assets. 

The founding members have also become more open to construction risk as Pip has developed, Segars said: “It has become more apparent that there are ways of managing construction risk." 

The platform will have a general partner sitting outside the asset managers to ensure alignment of interest and governance oversight. “We will also have, sitting within the fund, some investment oversight,” Segars said.

Once the fund hits its first close it will be open to other pension funds. “It has been key to us at the NAPF that this is something that is open to pension funds of all shapes and sizes," said Segars.

“It is something brand new for UK pension funds to work together in this co-ordinated way to create a new fund."