Impact drives returns for sustainable infrastructure fund

Impact drives returns for Gresham House’s first sustainable infrastructure fund

• Targets sub-£50 million ‘levelling up’ opportunities throughout the UK
• £300 million invested with 11 platform businesses across six high-impact sectors
• Continues to deliver real-world impact, driving positive financial returns:

─     World’s largest vertical farm funded and being built in the UK;

─     30,000+ rural homes now connected to reliable high-speed broadband;

─     4,000 hectares of non-arable land to be transformed into habitat banks;

─     300,000 tonnes of waste per year planned to be used to replace coal; and

─     Over 2 million litres of used cooking oil recycled and converted to biofuel.

Gresham House plc, the specialist alternative asset manager, today announced an inaugural performance update for its dedicated sustainable infrastructure strategy, “BSIF”. BSIF’s first fund – BSIF I – is currently delivering a 21 percent gross internal rate of return (IRR)[1], more than double its target IRR. BSIF I reached a final close in May 2020 having reached its hard cap of £300 million. It is backed by one UK Treasury and six UK local authority pension fund limited partners (LPs).

The BSIF strategy focuses on local and regional projects that deliver a positive social or environmental impact. BSIF is managed by Gresham House’s experienced Sustainable Infrastructure team, who have recently made several investments spanning digital inclusion, sustainable agriculture, waste recycling and other key infrastructure throughout the country to support the UK’s levelling up agenda. The BSIF strategy comprises two closed-ended funds both with 12-year horizons, enabling the team to take a longer-term view and helps to drive continued momentum across its six SDG-aligned target sectors.

As Gresham House’s first Sustainable Infrastructure fund, and via the 11 platform businesses within its portfolio, BSIF has helped to provide connections to more than 30,000 rural and underserved homes to highspeed broadband and is on track to deliver 500,000 new connections by 2025. Following its investment in the world’s largest vertical farm, 4 acres of vertical farming space will soon sustainably deliver the equivalent yield of crops as up to 2,000 acres of fields.

Other highlights include building a plant in Middlesborough to divert 300,000 tonnes of non-organic waste from landfill, turning it into pellets to replace coal used for cement and steel production, as well as processing over 2 million litres of used cooking oil in 2021 to produce sustainable biofuels. Working with Environment Bank, more than 4,000 hectares of non-arable land is planned to be transformed into protected natural habitat.

 By focusing on mid-market (sub-£50 million) opportunities, Gresham House’s Sustainable Infrastructure team prioritises underfunded sectors that offer the potential for compelling returns, while providing hands-on support to the entrepreneurs and technologies making a tangible difference for communities and the environment. The team is currently fundraising for its second fund, BSIF II, to address c.£1.8 billion of funding pipeline from its 11 platform businesses.

Peter Bachmann, Managing Director of Sustainable Infrastructure at Gresham House said: “The strong ongoing performance we have announced today shows that targeting positive environmental and societal impact drives attractive returns. Our first flagship fund is already fully invested, and we have put the capital to good use, accelerating the changes and innovative solutions required to address many of society’s most difficult challenges.

“I am grateful to our LPs for their continued support and to our dedicated team who are helping to improve lives and significantly reduce emissions. We are fortunate to work with some of the UK’s most exciting sustainable infrastructure companies, and I am confident that together we will continue to create ever greater impact, as well as the potential for strong, risk-adjusted financial returns. We have proven this approach works and can scale, so we plan to build on this positive momentum and continue to fund our large, controlled pipeline.”

 Glyn Caron, Chair of the Committee, Greater Gwent (Torfaen) Pension Fund said:

“As responsible investors we are committed to contributing to positive environmental and social change. The Gresham House team’s modern approach to infrastructure has given us access to exciting and meaningful investment opportunities within the UK that we are proud to see making a significant and lasting impact for the benefit of our members, beneficiaries and society as a whole.”

A spokesperson for Worcestershire Pension Fund added:

“As well as delivering strong returns, many of the projects that BSIF invests in are helping us to meet our levelling up agenda, which is a priority for all of us at Worcestershire Pension Fund. Already tracking at double its target IRR, we have great confidence that the team will continue to identify and deliver new impactful opportunities for us to support for years to come.”

_{Past performance is not a reliable indicator of future performance. Capital at risk.}