Six Local Government Pension Scheme Funds announce landmark first investment in local solar assets

Six LGPS Funds from the South West region have announced the first investment through Wessex Gardens LP. This ground-breaking initiative saw the Funds come together to jointly commit over £300 million for investment in renewables and energy transition assets in the South West.

With the market value of LGPS funds reaching £359.1 billion (as at March 2023) initiatives like Wessex Gardens show what can be achieved through collaboration, delivering real world change at scale.

The c.£230 million investment, made through the partnership, delivers climate-friendly investments, at scale, mainly in the South West region. It forms part of the largest operational solar deal ever transacted in the UK, and involves the Avon, Cornwall, Devon, Gloucestershire, Oxfordshire and Wiltshire LGPS Funds and aligns with the Funds’ strong commitments to tackling climate change.

Nick Dixon, Head of Avon Pension Fund, said: “We are pleased to see the close of the first investment as part of this ground-breaking collaboration. We are clear that climate change is an existential threat, and we want to drive real change through how we invest. This partnership allows us to make a significant contribution to achieving our climate objectives. It’s been a really positive experience working with other LGPS Funds and the team at Schroders Greencoat to achieve this investment.”

Jenny Devine, Head of Wiltshire Pension Fund, said: “We’re delighted with this cornerstone investment in Wessex Gardens. Our collaboration with other LGPS Funds has enabled us to invest in solar at scale across the South West, earning strong returns for our members while also supporting our goal of net zero by 2050.”

The first investment involves the Funds acquiring a stake in the Toucan Energy portfolio, investing c.£230 million in the deal to acquire predominately local solar assets.

Wessex Gardens LP will initially hold a stake in the portfolio of solar assets, which are distributed across the UK. Over time the portfolio will be restructured so the Partnership is holding predominantly South West assets consistent with the Funds’ ambitions around place-based/local investing.

The end state portfolio held by the partner funds will see around c.£230 million invested in 17 assets with a generating capacity of approximately 196MW, equivalent to powering nearly 70,000 homes.

The manager of Wessex Gardens LP, Schroders Greencoat, has a successful track record of negotiating large and complex transactions. They have again demonstrated their strength in navigating the complexities of a competitive acquisition process to deliver a successful outcome on the Partnership’s behalf.