Octopus Investments has secured £150m from four Local Government Pension Scheme (LGPS) investors for its Affordable Housing Fund, the manager revealed.
The new commitments come from Avon Pension Fund, which is contributing £50m, Gloucestershire’s fund is adding a further £50m, while Devon’s Pension Fund pledged £40m, and Clwyd a further £10m. These investments also include co-investment strategies aimed at delivering affordable homes in specific geographic areas.
Avon, Devon and Gloucestershire are part of the Brunel Pension Partnership pool while Clwyd is part of Wales Pension Partnership.
This latest fundraising effort follows the fund’s initial close in December 2023, which saw a £50 million raise from London CIV, the investment pool for 32 of London’s LGPS funds, and an additional £10 million from Better Society Capital, a social impact investor.
Octopus said that the capital raised last year has been fully allocated to affordable housing projects through its registered social housing provider, NewArch Homes. One notable project includes the acquisition of 180 affordable homes from Maidstone-based Golding Homes in May 2024, enabling Golding Homes to reinvest the capital into building new affordable homes.
Addressing the issue of high energy costs for affordable housing tenants remains a key goal of the fund. Through its affiliation with Octopus Energy, the fund aims to build energy-efficient homes to reduce residents’ energy bills. This initiative aligns with LGPS funds’ environmental targets while delivering substantial societal benefits by providing safe and secure housing for those in need.
Jack Burnham, head of Affordable Housing at Octopus, highlighted the importance of local investment in housing: “We know there are a number of locally interested investors looking for opportunities to deploy capital into funds that can provide specific social impact to their local areas. We are thrilled to be working with Avon, Gloucestershire, Devon, and Clwyd Pension Funds to help support them in delivering affordable homes in their areas, or in other regions across the UK.”
Shaun Stephenson-McGall, chair of Avon Pension Fund Investment Panel, expressed his enthusiasm for the initiative: “We are delighted to invest £50m in affordable housing. This is broadly the equivalent of 250 new homes being built for up to 1,000 people. Critically, at least 20% will be in the Avon region. The new-build properties will raise the supply of secure, affordable, and energy-efficient homes for those that need them most. We’re proud to have worked alongside Devon and Gloucestershire pension funds to get this investment over the line. This investment will help us meet our new net zero 2045 goal while delivering attractive financial returns to help us meet future pension promises.”
Phil Latham, head of Clwyd Pension Fund added: “Clwyd Pension Fund is delighted to partner with Octopus to deliver affordable housing across the UK. This collaboration matches our ambition of driving positive societal and environmental impact in the UK while also fulfilling our fiduciary duty of achieving sustainable investment returns.”
