APG, which manages the assets of ABP and a series of other Dutch pension funds, has invested €250m in a Smart City infrastructure vehicle set up to pool pension fund investments.

The Smart City Infrastructure Fund will invest in select infrastructure across Europe, North America, Australia and other major urban areas in the world and is launched with APG’s initial investment commitment together with Whitehelm Capital.

The investment vehicle aims to invest in the development of independent and open access infrastructure projects, which lead to so-called Smart City solutions. This includes projects that promise to improve life quality while generating revenues and savings for cities, such as smart lighting, parking, waste collection and pollution control, to enable sustainable development of urban areas.

APG and Whitehelm set up the fund after seeing a growing demand for financing the scale-up of integrated Smart City as it does not have access to long-term institutional financing and capacity, APG said in a statement.

The new fund is the first initiative of its scale from the private sector, able to provide concrete solutions to known challenges to unlocking social benefits and the transition towards low carbon, resource efficient and competitive economies.

APG head of infrastructure Europe Ron Boots said the fund is the latest of the many exciting initiatives that APG is pursuing with the aim of promoting the development of a sustainable society for future generations while “incorporating the UN Sustainable Development Goals into a tangible investment product that can deliver attractive risk-adjusted returns”.

In a statement, Boots said: “The ultimate objective of the fund is to improve quality of life and meet the needs of cities, allowing city officials to interact directly with the community, to improve physical infrastructure and how essential services are delivered.

“The launch of the Smart City Infrastructure Fund – the first of its kind, globally – fits the long-term goals of ABP and our other pension fund clients that we work for.”

The sector’s investment requirements are estimated to be worth €1.5trn by 2025, APG said. The fund will use a layered approach to ensure an appropriate control and risk transfer between each layer for a viable project.

The fund provides the benefits of long-term infrastructure investment, new business models and innovative use cases, acting as a hub to share knowledge effectively across markets and to realise the much-needed physical infrastructure that underpins smart city developments.

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