Franklin Templeton has been examining how it can bring police stations into its social infrastructure impact strategy, according to senior execs.
The global multi-asset-class fund manager launched a strategy in 2018 to invest in healthcare, education, housing, justice and emergency, and civic infrastructure. An open-end vehicle, it has received commitments from European LPs as well as Australian and Canadian investors. It had made 26 investments, all in Europe, as of the end of 2022, totalling €605 million.
Police stations are not usually considered part of social infrastructure, though related assets such as prisons and courthouses are generally considered to fall within the category. Franklin Templeton is therefore an outlier in explicitly including them within its opportunity set, although the firm conceded that in practice they have not yet found the right asset in which to invest.
“Police stations are one we look at very, very closely,” explained head of impact John Levy at a media breakfast on Wednesday morning. “I always say we’re not in the business of impact as an opinion. So if two rational people can say that this is a good thing and this is a bad thing, we’re not going to touch that.
“[If] it’s a training centre, training police on community engagement, that’s what we need, that’s a good thing. Others, if it’s a SWAT training facility, that’s not something we would touch, but it is a reality that we need strong and fair policing in our communities. And so if we find that location that specifically does provide a police service that is very well regarded by its community, and that something specific at that asset is providing that positive, we will look into it.”
Despite having a significant footprint in the US, the firm has yet to launch an impact product targeting the region. Though a US strategy is likely to come “at some point in time”, managing director Raymond Jacobs suggested that there was less need for private investment in the US social infrastructure market currently.
“I think there, more than here, we have the issue on the need for our capital,” he said. “Social infrastructure in the US is pretty much funded by muni bonds, and muni bonds are extremely cheap, and tax advantaged.
“It may change of course in this environment where it may be a little bit more difficult for certain communities to borrow via the bond market. But that has so far been the feedback in initial discussions.”
This article has been updated to reflect that, while Franklin Templeton has seen interest from Local Government Pension Schemes, none have committed to its social infrastructure fund.