The UK has seen 20 of its largest pension providers and insurers backing a regional growth drive, kick-started by investment from Legal & General and NEST.
‘Sterling 20’ is an investor-led partnership of 20 of the UK’s largest pension funds and insurers and will be established at the Regional Investment Summit in Birmingham on Tuesday, working with the government and City of London Corporation to channel the nation’s savings into key infrastructure and fast-growing businesses in key modern industrial strategy sectors such as artificial inteligence (AI) and fintech.
The formation of the initiative comes as pension providers ramp up their investment in Britain. It builds on July’s Mansion House Accord, which saw 17 providers representing 90% of active defined contribution scheme savers, commit to invest at least 5% of their main default funds in UK private markets.
This commitment will unlock over £25bn (€28.8bn) for new UK housing infrastructure and high-growth industries.
All 17 signatories of the Accord, as well as annuity providers Rothesay and Pension Insurance Corporation (PIC), and the Pension Protection Fund (PPF), have signed up to form the Sterling 20, as the investment drive was kicked off by L&G and NEST.
L&G made a £2bn commitment to deliver 10,000 more affordable homes and create around 24,000 more jobs nationwide by 2030.
NEST, meanwhile, will provide Schroders Capital with £500m, of which £100m is expected to be channelled into UK investment in the coming years. NEST will also invest £40m to deliver gigabit-capable fibre broadcast to remote areas in Scotland and Northern England to deliver high-speed speed reliable broadband to rural homes and businesses in hard-to-reach communities.
During the summit, the chancellor of the exchequer, Rachel Reeves, is also set to meet with the Australian superannuation fund AustralianSuper, as the government seeks to reinforce the UK as an attractive investment destination for the billions of pounds it will deploy outside of Australia in the coming years.
Ahead of this, AustralianSuper has 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.
Bridging opportunities
The Office for Investment, which is hosting the summit, will use its position as a bridge between government, investors and local leaders to match transformational investment opportunities with capital. It will leverage its visibility across the UK landscape to create a pipeline of opportunities that meet the Sterling 20 and Australian superannuation schemes’ investment ambitions and drive growth in every region of the country.
“Our country’s pension funds are some of the biggest in the world. When they invest in Britain, everyone benefits”
Rachel Reeves, the UK’s chancellor of the exchequer
Reeves said: “This is about getting Britain building again – bringing our savings, our investors and our regions together to deliver the homes, infrastructure and industries that will drive growth and create good jobs in every corner of the country.
“Our country’s pension funds are some of the biggest in the world. When they invest in Britain, everyone benefits – from the construction worker on site, to the small business on the high street, to the saver seeing their pension grow. Sterling 20 shows what can be achieved when we all pull in the same direction to build a stronger economy that works for, and rewards, working people.”
António Simões, group chief executive officer of L&G, said: “As a long-term investor in the UK economy, L&G has a proud history of using pension capital to develop assets that deliver strong financial returns and lasting social impact.”
Simões said that the group’s £2bn 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.
Ian Cornelius, CEO of NEST, added: “From major infrastructure projects to ambitious small businesses, our investments are helping support economic growth across the country.”
NEST has already committed around £4bn to UK private markets, and Cornelius flagged that by 2030, this is expected to rise to around £12bn.
He said: “A strong pipeline of opportunities will be essential to realising this growth for the benefit of our members and the UK economy.”
Damian Moloney, deputy chief investment officer at AustralianSuper, added: “The Superannuation Mission offers a valuable opportunity to share insights, deepen collaboration and build on the strong investment ties that exist between Australia and the UK.”
He said that with the launch of the £500m UK Living Platform, the superannuation fund continues to view the UK as a key global investment destination.
“With the fund on track to grow its UK assets to £18bn by 2030, we look forward to further facilitating investment between the two countries for the benefit of members,” he noted.
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