Lancashire Pension Fund acquires stake in Red Madrileña de Gas

The Lancashire County Pension Fund (LCPF), one of the largest schemes in the UK Local Government Pension Scheme (LGPS), has acquired a 12.5% equity stake in Madrileña Red de Gas (MRG), a gas distribution company in Spain’s Madrid region.

MRG is owned by a consortium formed by EDF Invest, Gingko Tree Investment and Dutch pension fund manager PGGM.

According to a source, Mike Jensen, CIO at LCPF, said:

“Specifically, we see MRG as a particularly well-run company with good growth potential and a great regulatory relationship. In addition, we will be in partnership with leading investors.”

The cost of the acquisition has not been revealed.

LCPF was advised by Santander Corporate & Investment Banking as exclusive financial adviser and Cuatrecasas, Gonçalves Pereira (Madrid) as legal adviser.

The transaction represents LCPF’s fourth acquisition of overseas infrastructure assets, following its purchase of a stake in EDF Énergies Nouvelles’ Portuguese wind farms last year, and ownership of two renewable energy businesses – landfill gas in the US, and cane waste power plants in Australia.

Total Infrastructure makes up 9.6% of the LCPF’s total portfolio, worth £5.8bn at 31 December 2015. The pension fund’s infrastructure target range is 10-15%.