Australian pension-owned IFM allocates £10bn to UK transition projects
An investment manager owned by a host of Australian pension funds plans to invest billions in UK assets over the next three years.
A$217 billion IFM Investors, a global institutional investment manager owned by multiple Australian superannuation funds, has signed a Memorandum of Understanding (MoU) with the UK's Department for Business and Trade.
The deal includes capital commitments of £10 billion between now and 2027.
"The objectives are to drive IFM’s investment in the UK across large-scale green infrastructure and energy transition projects by working with the government to identify commercially viable opportunities for investment," explained IFM Investors chief executive David Neal.
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The MoU follows an earlier commitment by IFM, in 2022, to invest £3 billion in its UK-based infrastructure portfolio assets, "which IFM is on track to meet," Neal stressed.
He argued that the agreement "reflects the appetite of IFM and Australian super funds to invest in the UK market."
FM Investors is owned by a collective of 17 Australian pension funds, including some of the country's largest retirement schemes such as Australian Super, UniSuper, Hesta and the Australian Retirement Trust.
UK connection
IFM Investors first opened a London office in 2006 and has, so far, primarily focused on investments in infrastructure equity and debt, such creating an infrastructure portfolio that includes investments in UK toll roads, utilities and airports.
Earlier this year, IFM recruited Maria Nazarova-Doyle, the former responsible investment lead at Scottish Widows to head its global sustainable investments team. It has also appointed Amanda Latham, former policy lead at Barnett Waddingham to its sustainable investment team.
IFM has steadily grown a portfolio of loans to UK-based infrastructure and energy transition businesses and projects.
As an example of how the MoU may support further UK investment, Neal singled out Nala Renewables, a portfolio company of one of IFM’s funds and a renewable energy business headquartered in the UK.
It is currently seeking investment opportunities in the UK as it looks to achieve a renewable capacity target of 4GW by 2025.
"This deal is a signal of the confidence Australian super funds have in the UK as a place to invest."
Australian pension funds looking outwards
The Australian pension system is currently approximately £1.8 trillion and expected to grow to approximately £4.7 trillion by 2040.
"Increasingly more capital will need to be deployed in aligned economies such as the United Kingdom," Neal said. “Australia’s super funds system can be a trusted long-term partner with the United Kingdom."
In fact, "this Memorandum of Understanding should be seen as a signal of the confidence Australian super funds have in the UK as a place to invest," he added.
In relation to the collaboration with the UK government, Neil said that “partnerships between governments and long-term investors are necessary to unlock the potential of pension funds to invest to help mitigate system-level risks such as climate change.”
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Aware Super
The capital allocation by IFM to the UK comes only weeks after Australia's Aware Super pension fund told Net Zero Investor it planned to allocate A$10 billion, roughly £5.3 billion, to expand its energy transition footprint in the UK and Europe.
The pension giant, which has roughly A$160 billion in assets under management said it aims to "initially focus its direct investments from its new UK headquarters in real estate, infrastructure and private equity, with an emphasis on the energy transition sector."
The multi-billion allocation followed the opening of Aware Super's new office in London, its first outside Australia, with Damien Webb, Aware Super's deputy chief investment officer and head of international, recently relocating to the British capital.
Aware Super's reasoning behind the allocation was similar to IFM Investors' investment choice.
"The UK’s ease of doing business, closely aligned culture, proximity to Europe and Northern America were compelling factors in our decision to invest here," Webb explained to this publication at the end of November.
"Aware Super has ambitions to grow to A$250 billion of assets under management, with international expansion into the UK a key strategy aimed at achieving that goal," he said.
Currently, the fund has roughly A$17 billion invested in the UK and Europe. Aware Super holds an infrastructure and private equity portfolio in the UK. Investments include Forth Ports and Miller Insurance Services.
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