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INFRASTRUCTURE

An infrastructure specialist operating a well-established UK-focused shared investment platform.

Our purpose is to deliver consistent, positive risk-adjusted returns for investors, responsibly.

Peter Hofbauer

Head of Hermes Infrastructure

Hermes Infrastructure is an infrastructure specialist operating a well-established UK-focused shared investment platform. Hermes Infrastructure was formed in 2010 to consolidate and manage the BT Pension Scheme direct infrastructure investment programme which had been investing in the infrastructure asset class since 1996. Since 2010, we have developed a programme to facilitate infrastructure investment by other third-party institutional investors to invest alongside the BT Pension Scheme, one of the UK's largest pension schemes, offering our expertise, ability to outperform and responsible approach, to other investors.

With £4.4bn of AuM, we are one of the UK’s largest direct investors. Our investment portfolio currently comprises 15 investments spanning renewable energy, regulated utilities, ports and transport infrastructure.

Source: Hermes, as at 31 March 2017.

Our objective is to deliver superior risk-adjusted returns, whilst at the same time offering investors significant flexibility to create portfolios tailored to meet specific performance targets.

Infrastructure is an attractive asset class for institutional investors seeking long-term, inflation-linked stable cash flows. It is a very good fit, in particular, for pension funds with long-term liabilities. However, it is not a homogenous asset class, and has a correspondingly wide range of risk/return scenarios for investors to consider.

We offer clients the opportunity to choose between two separate investment strategies, Core and Value Added, each with its own competitive risk-related fee structure. Our aim is to provide investors with the flexibility to allocate funds in line with their own risk/reward objectives and to build a bespoke infrastructure portfolio via a single investment decision.

As well as managing the direct infrastructure programme on behalf of the BT Pension Scheme, we manage pooled infrastructure funds and co-investment vehicles on behalf of other UK, European, Asian, Middle Eastern and Australian public and private institutional investors including Local Government Pension Schemes, insurance companies, charities, corporate pension schemes and public trusts.

Hermes GPE Infrastructure Strategy (‘HIF I’) was established in 2011 and has £1.2 billion commitments from UK and European pension schemes. HIF I targets Core and Value Added opportunities, predominantly in the UK and Europe.

Responsible Investment

Hermes Infrastructure, in line with the overall approach adopted by Hermes, has a longstanding commitment to the principles of responsible investment. We firmly believe a portfolio company’s approach to ESG materially impacts long-term value and all aspects of risk management. A foundation of sound governance combined with positive management of environmental and social responsibilities better equips businesses to both reduce and mitigate the impacts of risks should they occur, which has the potential to contribute to creating enduring value.

We believe that a strong focus on responsible investment is particularly important for infrastructure assets given their public service nature. This magnifies the need for sustainability, quality of service, value for money and ensuring affordability for customers. It requires a commitment to long-term partnership and the need for constructive engagement with key stakeholders including the community, regulators, Government, customers, co-investment partners and investors.

Hermes Infrastructure has in place a responsible investment policy which comprises a framework to systemise ESG risk assessment for all investments that we make. The framework helps us to identify key risks, introduce mitigants and implement ongoing monitoring programmes over the investment lifecycle.

Hermes Infrastructure are a signatory of PRI Principles for Responsible Investment, a member of the Ofwat group on establishing Voluntary Code of Governance, and an active member of the GIIA, Global Infrastructure Investor Association.

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