Nest, the UK’s largest pension scheme by number of members, has committed €530m (£450m) to a new infrastructure debt fund – its first major initiative since becoming an owner of global investment manager IFM Investors.
The partnership deal was finalised in May, making Nest the first international owner of IFM, joining 15 Australian superannuation funds.
As part of the partnership, Nest and IFM have committed to creating investment strategies with a keen focus on private market opportunities across the UK and Europe.
This is the first IFM fund in the partnership to achieving that ambition.
The launch of the infrastructure debt fund further strengthens Nest’s investments into private markets, which include assets in the UK, such as UK fibre, wind, waste to energy, bus or rail infrastructure.
The move supports IFM’s global expansion, while also supporting Nest’s ambition to increase its allocation to private markets from 17% to 30% of assets under management by 2030.
The infrastructure debt fund aims to deliver risk-adjusted returns in sub-investment grade infrastructure for Nest’s more than 13 million UK members.
Nest intends to invest £5bn in private markets through IFM by 2030.
The master trust’s commitment to this new fund aligns with its signing of the Mansion House Accord earlier in May.
As part of the accord, 17 of the largest UK workplace pension providers express their intention to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with 5% of the total allocated to the UK.
Liz Fernando, chief investment officer at Nest (pictured), said: “This new IFM fund further shows our commitment to supporting the UK economy and gives a significant boost to our ambition to almost double our assets under management into private markets to 30% by 2030.”
Fernando added that Nest and IFM “came together to develop sophisticated investment strategies like this one”.
David Cooper, head of debt investments in EMEA of IFM Investors, added: “Investing in infrastructure is critical to powering the digital economy, cutting carbon emissions and driving the energy transition. By partnering with organisations like Nest, IFM is working to deliver better retirement incomes for workers across the UK.”
Minister for pensions Torsten Bell welcomed the move, given how it aligns with the government’s ambition to get pension funds to invest more in private markets. “I welcome the steps Nest, and the wider pensions industry, are taking to invest in more productive assets, from growing companies to infrastructure,” he said.
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