Agenda item

The Head of Pensions introduced this item to the Panel and said that this discussion would set the scene for the workshop that would take place on the conclusion of the meeting.

He explained that the investment strategy recommended by the Panel includes a 3% or c.£170m allocation to ‘local impact’ and it was envisaged that our local impact investments would be spread over three broad sectors:

·  Renewable infrastructure: 40% - 50%

·  Affordable Housing: 40% - 50%

·  SME funding: 10% - 20%

He stated that they have already completed their first local impact investment – the £50m allocation to Wessex Gardens. £35m has already been drawn by the fund to finance the acquisition of an operational solar portfolio, which in its final state, will comprise 17 solar farms across South West England, made in partnership with 6 other LGPS.

He added that returns were expected to be between 7% - 9% per annum.

He informed the Panel that they now have over 15 potential local impact proposals to assess and would like the Panel to discuss an assessment framework for local impact opportunities.

He explained that the assessment process consists of two stages:

a)  Initial screening: to assess each opportunity objectively, we have developed an assessment matrix based on high level research and preliminary discussions with the investment manager. The matrix uses 12 criteria to capture factors such as the level of local impact, financial attractiveness, and environmental credentials. The scoring system is not designed to be mechanical, rather to help evaluate and rank opportunities, providing a short list for in-depth due diligence.

b) In-depth due diligence and independent advice: is applied to shortlisted proposals and undertaken by independent consultants or specialist advisers before a firm recommendation is brought to Panel to approve.

Jackie Peel asked if further definition could be given to what is meant by ‘Local’ -v- ‘South West’.

The Head of Pensions replied that it is difficult to correlate between the type of investment and the geographical footprint, but stated that it must be within the UK, regionally would be within the South West and local would be the former Avon area.

He added that the three target sectors for investment would likely be covered as follows:

·  Renewable Infrastructure: South West

·  Affordable Housing: Avon / South West / UK

·  SME funding: UK

Jackie Peel asked if the figure in the report of ‘a preference for investments across South West England of at least at least 15-20% to meet the local test’ would be per sector or as a whole.

The Head of Pensions replied that this would be in aggregate as substantial investment in the solar farms in the South West had already been made.

The Director of One West & APF commented that he felt that it was important, especially in this first round of investment, to have a local focus.

The Panel, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVED, in accordance with the provisions of the Section 100(A)(4) of the Local Government Act 1972 that the public should be excluded from the meeting for this item of business, because of the likely disclosure of exempt information as defined in paragraph 3 of Part I of Schedule 12A of the Act as amended.

The Panel RESOLVED to:

i)  Note the proposed assessment framework for local impact opportunities and gave feedback to Officers to inform a final version of the framework.

ii)  Discuss the two investment ideas in closed session, to advise Officers which of the ideas should be explored in more detail, with a view to any firm investment proposal being brought forward for agreement at a subsequent Panel.