Two industry players are in talks with several UK pension funds about designing a bespoke infrastructure investment platform.
Law firm Pinsent Masons and investment consultancy Redington are holding informal discussions with a number of UK pension funds about creating a platform to assist schemes in meeting their long-term funding objectives by facilitating investment in UK infrastructure debt, which they argue can offer potentially better risk-adjusted returns than traditional asset classes.
The UK National Infrastructure Plan, published by Infrastructure UK in 2011, outlined a £250bn pipeline of national infrastructure needed in the UK over the five year period to 2015/16.
In March, the National Association of Pension Funds (NAPF) and the Pension Protection Fund announced plans to launch an infrastructure investment platform, known as the Pension Infrastructure Platform, in January 2013.
Pinsent Masons global business consultant in the infrastructure sector Graham Robinson said: “The current lack of funding for new UK infrastructure will not necessarily help the UK economy recover and become more competitive, but we are confident that pension funding will become a more established way of funding infrastructure, as it is already in other countries.” Pinsent Masons and Redington are developing and road testing models and legal structures to facilitate access to the UK infrastructure market.
Pinsent Masons head of pensions strategy Robin Ellison added: “We are looking to develop a number of ideas which will enable our clients to put the theory into practice and allow UK pension funds to provide the debt funding needed for investment in infrastructure.”
Redington has been actively promoting infrastructure investment to its clients and the wider pensions community as a way of accessing attractive, secured, long dated and often index-linked cashflows.
The consultant said there is an increasing desire among its clients and the wider pensions sector to gain exposure to UK infrastructure debt, but there are limited opportunities for them to do so in a manner tailored to their specific needs. With this in mind, it is engaging with interested pension funds and key players in the infrastructure sector to help design a platform which will facilitate this.
Redington co-chief executive Robert Gardner added: “To begin with, our platform will focus on debt funding of infrastructure and we believe it will support and supplement the NAPF’s Pension Infrastructure Platform.”
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