A new investor-led partnership between 20 of the UK’s largest pension funds and insurers – The Sterling 20 –– has been established at the Regional Investment Summit in Birmingham today.
It will see the government and City of London Corporation help channel this investment capital into key infrastructure and fast-growing businesses in key modern industrial sectors like AI and fintech.
L&G have kicked off the investment with a £2bn commitment by 2030, delivering around 10,000 more affordable homes.
António Simões, group chief executive, at Legal & General, said: “Our £2 billion commitment, targeted at housing, infrastructure, and urban regeneration, will help unlock the investment needed in productive assets across the country – creating jobs, strengthening communities, and driving both regional and national growth.”
Workplace pension scheme Nest will also provide Schroders Capital with £500m – of which £100m is expected to be channelled into UK investments in the coming years.
In addition, Nest will invest £40m to deliver gigabit-capable fibre broadcast to remote areas in Scotland and Norther England – delivering high-speed reliable broadband to rural homes and businesses in hard-to-reach communities.
Ian Cornelius, CEO of Nest, said: “Every decision we make puts our members and their long-term outcomes first. We believe private assets can play a key role in delivering strong, consistent returns for them. That’s why the UK, with its exceptional investment opportunities, is a cornerstone of our strategy.”
The formation of the Sterling 20 comes as pension providers look to possibly increase their investments in Britain.
July’s Mansion House Accord saw 17 providers, representing 90% of active defined contribution schemes, commit to invest at least 5% of their main default funds in UK private markets, potentially unlocking over £25bn for new UK housing infrastructure and high-growth industries.
All 17 signatories of the Accord, alongside annuity providers Rothesay and PIC, and the Pension Protection Fund have signed up to form the Sterling 20.
There are plans afoot for The Sterling 20 to be expanded early next year to include the Local Government Pension Scheme (LGPS).
Richard Law-Deeks, chief executive officer of LGPS Central, said: “As a Local Government Pension Scheme asset manager soon to have responsibility for investing around £100 bn of assets for our partner funds, we are fully committed to working with government on producing a pipeline of investible opportunities in central England and the wider UK.”
The summit also saw AustralianSuper, Australia’s largest pension fund and 17th largest in the world, increase its investment into the UK housing market.
The fund met with the chancellor at the summit, as the government seeks to boost the UK as an attractive investment destination for the billions of pounds it will deploy outside of Australia in the coming years.
AustralianSuper also announced a new UK living investment platform dedicated to investment in rental homes as part of its ambition to invest £8bn of new capital into the UK over the next five years.
Damian Moloney, deputy chief investment officer at AustralianSuper, said: “AustralianSuper continues to view the UK as a key global investment destination. With the Fund on track to grow its UK assets to £18 billion by 2030, we look forward to further facilitating investment between the two countries for the benefit of members.”
Working with the Office for Investment, the Sterling 20 and Australian Superannuation Scheme – manage a combined £5trn in assets.
Andrea Rossi, CEO of M&G added: “The Sterling 20 Group offers a powerful platform for institutional investors to shape the country’s future from long-term investment in housing, infrastructure or strategic national projects.”
Alastair King, Lord Mayor of London, also noted: “The Mansion House Accord marked a pivotal step in pension investment reform – building on the foundations of the Mansion House Compact and signalling a clear industry commitment to channel investment directly into UK growth. This next stage transforms commitment into deployment by uniting the UK’s leading investors around a shared vision and coordinated strategy with government.”
Calum Cooper, head of pension policy innovation at Hymans Robertson agreed. “With the Sterling 20 we have fresh and specific commitments to targeted projects in affordable homes and regional productivity. These are investment opportunities that also have a meaningful social impact,” he said.
The members of the Sterling 20 are: Aegon, Aon, Aviva, L&G, LifeSight by WTW, Mercer, M&G, NatWest Cushon, Nest, Now Pensions, People’s Partnership, Phoenix Group, Royal London, Smart Pension, SEI, TPT, the Universities Superannuation Scheme, Rothesay, Pension Insurance Corporation and the Pension Protection Fund.
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