LLPP to invest half of portfolio in illiquid assets

secondariesinvestor.com /llpp-to-invest-half-of-portfolio-in-illiquid-assets/

9/28/2015

Fundraising

Investments will include secondaries, according to Edi Truell, head of the Strategic Investment Advisory Board
established to advise the Lancashire and London Pensions Partnership.

By

Victoria Robson

29 September 2015

The Lancashire and London Pensions Partnership (LLPP), newly formed out of the London Pensions Fund Authority
(LPFA) and the Lancashire County Pension Fund (LCPF), will target about half of its portfolio at illiquid assets,
mirroring investment allocations at the LPFA.

These include private equity funds, secondary and direct investments, private debt, infrastructure, real estate and a
bucket for other assets such as timber, Edi Truell, the head of the Strategic Investment Advisory Board (SIAB)
established to advise the LLPP, told Secondaries Investors sister publication Private Equity International.

Truell is also the chair of the LPFA until 1 September. LLPPs portfolio will focus primarily on the UK.

The LLPP will build on the LPFA model, thats the recommendation, said Truell, who is also the Mayor of Londons
adviser for pensions and investments. We want to move to a situation where we are in partnership with private
equity GPs.

The LPFA has 4.8 billion (US$7.3 billion; 6.5 billion) of assets under management, of which eight percent is
invested in private equity, while the LCPF has 5.8 billion of assets, of which 15 percent is invested in private equity,
according to PEIs Research & Analytics division.

The two pension funds local boards will remain in place. Their administration will be merged and the partnership is
currently creating an investment team.

Truell estimates that the merger will save 75 million over five years in running costs.

On every major strategic decision [the LLPP investment team] will ask the SIAB what we think, Truell said.

The LLPP, with its combined pool of assets of about 10 billion, plans to become operational next April. It aims to
pursue more direct and co-investment opportunities, and a wider range of fund managers, as reported previously by
Private Equity International.

The LPFA is moving from a position three years ago where it had invested in 29 private equity fund of funds, which
cost eight to ten percent a year in fees, a situation Truell described as sub-optimal, to a handful of significant, more
direct relationships.

These are with secondary funds that allowed the authority to get its money into the ground quicker, including Coller
Capital and Montana Capital Partners, he said. The LPFA executive team also run a direct co-investment
programme with the help of Adveq.
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The LPFAs other private investments span private debt, infrastructure, real estate and alternative assets such as
mining royalties.

The SIAB has a mandate to advise other public sector pension funds on consolidation and has held conversations
with funds of The Shareholder Executive, the London Collective Investment Vehicle, a group of 12 London boroughs
that have pooled assets, and the Pension Protection Fund.

In two years time, you might see the London Collective join forces with the LLPP in certain asset classes. It makes
sense to continue pooling assets, Truell said.

The SIAB is building an infrastructure team, which may be used by the LLPP, and is close to launching an investor
club of like minded, long term investors targeting chunky infrastructure opportunities of 1 billion or more.

There is a pipeline of deal flow. There is competition for mainstream, 1 billion deals. A lot of good investments
have gone to corporates and prices are bouncy. We will find other areas that are less competitive. This is a more
general view on private assets, Truell said.

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