The West Midlands Pension Fund aims to allocate up to £1.1bn to investments within the region over the next six to eight years.
Representing 5% of the fund’s assets under management, the decision forms part of the fund’s long-term investment strategy and follows approval of its updated Investment Strategy Statement.
As part of this work, the fund is working closely with the West Midlands Combined Authority (WMCA), which will identify and shape investable opportunities aligned with the region’s growth plan, and will be underpinned by a memorandum of understanding between the two organisations.
“Every opportunity will be assessed against the same standards we apply across the whole portfolio, including risk, return, due diligence, and governance.”
Rachel Brothwood, West Midlands Pension Fund
Rachel Brothwood, executive director of the West Midlands Pension Fund, said: “This is a clear, long-term target for local investment as part of our investment strategy statement. It is grounded in fiduciary duty and informed by advice and evidence. Every opportunity will be assessed against the same standards we apply across the whole portfolio, including risk, return, due diligence, and governance.
“Working with WMCA will help strengthen the pipeline of investable opportunities, but the fund and our pooling partner will always make independent investment decisions in line with our fiduciary duty to members and employers.”
The fund expects local investments to target private market opportunities such as housing and real estate, infrastructure, and financing for businesses.
Richard Parker, Mayor of the West Midlands, said: “This is a massive vote of confidence in the West Midlands. By setting aside £1.1bn for local investment, the pension fund is supercharging my growth plan by backing our key industries and businesses. The fund has an obligation to protect its members’ money and deliver best value for them, so this commitment really is testament to our region’s strength as an investment prospect.”
Local opportunities will be assessed and implemented through the West Midlands Pension Fund’s pooling partner, LGPS Central, which will conduct detailed due diligence and make final investment decisions on any opportunities. The fund will maintain active oversight and challenge the pool on investment performance and other metrics.
LGPS Central backs Yorkshire Water acquisition
Meanwhile, LGPS Central has committed capital to Yorkshire Water through a new partnership led by private markets manager EQT.
It forms part of a wider transaction in which EQT is acquiring a significant percentage stake in Yorkshire Water’s parent company Kelda Group from existing investors. The structure provides liquidity while ensuring continued long-term stewardship of the asset through an open-ended infrastructure approach designed to support sustained investment.
“We see significant long-term value in essential infrastructure assets that underpin the functioning of the UK economy.”
Jayne Atkinson, LGPS Central
The transaction takes place at a time of heightened focus on the UK water sector, including recent policy developments and regulatory reforms aimed at strengthening governance, transparency and long-term sustainability.
LGPS Central said it believes this evolving framework creates a supportive environment for long-term patient capital, particularly from UK pension funds.
LGPS Central’s chief investment officer Jayne Atkinson said: “We see significant long-term value in essential infrastructure assets that underpin the functioning of the UK economy. Water infrastructure plays a fundamental role in supporting communities, environmental outcomes and economic resilience.
“Through this investment we are able to support the continued development of a critical utility while delivering stable, long-term value for our partner funds.”
Avon aims for impact and growth
Avon Pension Fund’s Local Impact Portfolio is on track to reach £300m by 2027, according to its latest Responsible Investment Report.
The £5.8bn pension scheme said the portfolio was already delivering benefits, with more than £50m invested in areas such as renewable energy – including regional solar projects – affordable housing, and small and medium-sized enterprises.
Avon has also achieved a 71% reduction in the carbon footprint of its equities since 2020, meaning it has already met its 2030 target. There has also been a 65% reduction in the carbon footprint of its corporate bonds since 2020, with around 15% of its investments supporting climate solutions such as renewable energy.
The pension scheme’s engagement approach has also helped reduce emissions from carbon-intensive sector investments such as aviation, cement, and steel.
Read more on Avon’s approach at LAPF Investments. Nick Dixon, head of pensions at Avon, recently spoke on issues such as member engagement and responsible investment for a special episode of the Always A Pensions Angle podcast, in partnership with the FiftyFaces Podcast.
