Belgium’s €1.6bn Pensioenfonds Metaal has established a groundbreaking 15-year infrastructure investment strategy that emphasises long-term commitment, a substantial presence in unlisted infrastructure, strategic diversification, and a distinct focus on European opportunities. The strategy, borne out of a 2008 asset-liability management study, aims to minimise risk in equity allocation and prioritise stability over optimising returns in the face of potential economic downturns.

The fund’s asset selection process reflects a preference for Belgian opportunities while strategically extending to European projects. The Belgian preference stems from a belief in supporting local communities and nurturing economic advancement. The fund takes an active role in investment and advisory committees as well as taking up board positions at some portfolio companies, demonstrating a desire to align investments with its long-term strategy.

Since 2010, Pensioenfonds Metaal has operated a partnership with PMV, a Belgian infrastructure investor. This collaboration has not only provided access to a broad spectrum of infrastructure projects but has also laid the groundwork for sustainable growth in Belgian infrastructure investment. The partnership focuses on early-stage assets and has allowed the pension fund to grow its portfolio relatively quickly. Additionally, a second specialist partner, Abrdn, was appointed for European projects.

The fund’s unlisted infrastructure investment strategy centres on a ‘patient capital’ approach, targeting long-term cash flows from infrastructure projects. Strategic diversification across sectors and geographical regions is integral to risk mitigation and amplifying returns. The portfolio is managed by three external firms overseeing seven mandates and amounted to €255m at the end of 2022, representing approximately 15% of overall assets.

Environmental, social, and governance considerations are integrated into the pension fund’s investment process. Through the PMV partnership, it has invested in wind and solar power assets as well as social infrastructure such as schools and sports facilities.