Octopus Investments has announced that it has raised a further £150million into its Affordable Housing Fund from a number of Local Government Pension Scheme (LGPS) investors.
The new commitments come from Avon (£50million), Gloucestershire (£50million), Devon (£40million) and Clwyd (£10million) LGPS, and include co-investment to deliver affordable homes in specific geographic areas. This latest fundraising round follows the Fund announcing its first close in December 2023, with a £50million raise from London CIV, the investment pool for 32 of London’s LGPS, and an additional £10m from Better Society Capital, the UK’s leading social impact investor.
The capital raised last year has now been fully allocated to affordable housing projects, demonstrating the Fund’s ability to deploy capital at pace with its own registered social housing provider, NewArch Homes. This includes the acquisition of 180 affordable homes in May of this year from Maidstone-based Golding Homes. This allows Golding to use the capital receipts to build more new affordable homes.
Energy costs continue to disproportionately affect affordable housing tenants, so building stock with close to zero energy bills remains a key goal of the Fund. Octopus’ links with its sister company, Octopus Energy, will enable more energy-efficient homes to be built to reduce resident outgoings.
The Fund therefore offers a model that has specific benefits for LGPS funds looking to meet their environmental targets as well as delivering meaningful societal change through providing safe and secure housing for those who need it in their local areas.
Jack Burnham, head of affordable housing at Octopus, commented: “We know there are a number of locally interested investors who are looking for opportunities to deploy capital into funds that can provide specific social impact to their local areas. We think this is an approach that should be embraced and are thrilled to be working with Avon, Gloucestershire, Devon and Clwyd Pension Funds to help support them either deliver affordable homes in their areas, or in other areas across the UK.”
Shaun Stephenson-McGall, chair of Avon Pension Fund Investment Panel, said: “We are delighted to invest £50million 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, said: “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.”
