National Employment Savings Trust, London, selected CBRE Caledon Capital Management and GLIL Infrastructure to jointly manage an initial £650 million ($899 million) allocation to unlisted infrastructure equity, a spokesman said.
CBRE Caledon is expected to manage a larger share of the allocation, the spokesman said. The intended split was not disclosed by the spokesman. NEST executives intend to deploy the £650 million this year, but commitments will depend on the sourcing of available deals, he added.
CBRE Caledon will invest NEST's assets in global core and core-plus infrastructure projects. NEST will also co-invest with CBRE Caledon.
The commitment to GLIL Infrastructure, a joint venture of U.K. local authority funds, will give NEST access to U.K. core infrastructure through an open-end fund.
Direct infrastructure equity investments can offer a diversification benefit to investors and a return premium over comparable public market equity investments, at lower levels of risk, Stephen O’Neill, head of private markets at NEST, said in a news release Monday.
"After a very competitive procurement, we've emerged with excellent fund managers that can deliver exactly what we were aiming for," he said.
"CBRE Caledon has demonstrated they have a sophisticated investment strategy, strongly underpinned with their shared commitment to managing ESG risks," he added.
"GLIL is a unique entity, showing the benefits that can be had when pooling resources and seeking innovative ways to help pension schemes fully utilize the benefits of being long-term investors," he added.
Infrastructure is set to account for 5% of NEST's portfolio by 2030 with investments in projects such as social housing, water and waste treatment plants, and seaports. Investments will be funded by new contributions to the U.K. multiemployer defined contribution plan, known as a master trust.
The selection follows the appointment of Octopus Renewables in March and completes NEST's search for infrastructure managers announced in January 2020.
Octopus Renewables is managing an initial £250 million allocation to unlisted infrastructure equity.