Australia’s largest pension fund pours £23 billion into UK and Europe

Australia’s largest pension scheme plans to invest £23 billion in the UK and Europe over the next five years as it joins other major global funds, pushing further into the private market to get benefit.

AustralianSuper, which manages A$244 billion (£128 billion) on behalf of its 2.5 million members, is expected to more than double its UK assets from the current £7 billion to more than £15 billion UK in 2026. Pension fund manager is planning to increase investment in Europe Damian Moloney, head of investment at AustralianSuper, International, told the Financial Times from £12.6bn to £28bn over the same period. period.

The planned purchases will keep the share of UK and European assets as a share of the total fund steady. But with global wealth predicted to grow to more than A$570 billion by 2026, AustralianSuper says the amount of cash available to spend abroad will increase dramatically. The fund’s rapid growth is being driven by factors unique to the Australian market, where mandatory superannuation, or pensions, employer contributions are growing and the number of Membership is increasing due to merger activity among savings program providers.

More than half of the funds have been invested overseas, including in major UK properties such as Heathrow airport and the King’s Cross redevelopment in London, but Moloney sees more international opportunities in private markets.

“There are strong opportunities in real estate, infrastructure and direct private credit in Europe and the UK,” said Moloney.

“We are looking at a variety of opportunities for high-quality sustainable mixed-use real estate investments that are or could be carbon neutral. (There are also) a plethora of infrastructure opportunities in the UK and Europe, driven by demand for property innovation and new construction, such as digital infrastructure. ”

The fund is also looking at “multiple opportunities” for private credit, in which non-bank financial firms lend to real estate and infrastructure projects, he said.

Moloney says the UK is an “obvious choice” to deploy more cash, particularly considering the fund as a long-term investor.

“Our experience to date in the UK has been very positive, with investments in properties such as Heathrow, Peel Ports and the King’s Cross redevelopment,” he added.

“There is a lot of high-quality talent, a stable and reliable regulatory and regulatory environment and many like-minded partners to work with. There is also a strong cultural fit. ”

Wayne Fitzgibbon, partner with professional services firm Mercer, said it “makes sense” to expand Australia’s super fund in the UK, given the government’s push to attract more capital at home and abroad with “big bang investment” initiative.

“The type of infrastructure opportunity in the UK – particularly social infrastructure and affordable housing – will provide the benefit of diversification in the global portfolio,” said Fitzgibbon.

“The same goes for building greener properties or converting existing properties into sustainable buildings. The same applies to related private debt opportunities. “

As part of its global expansion, AustralianSuper, which administers the pensions of one in 10 Australian workers, will double its London office from 50 to 100. Last week the foundation also appointed Eloy Lindeijer , a former investment executive of Dutch pension provider PGGM, who supports investment operations in Europe.

Details on the size of the company’s ambitions come amid a broader push by global pension funds into the private market, against a bleak outlook for public equities and the continued expansion of the public sector. continued to be squeezed for profits from low interest rates.

Last year, Caisse de Dépôt et Placement du Québec (CDPQ), a $400 billion Canadian global investment group headquartered in Canada, announced the plan with C$15 billion (£9 billion) spending heavily on private wealth in the UK and Europe.

In 2021, the $227 billion Ontario Teachers’ Pension Plan also announced a $70 billion (£40 billion) payout in the coming year. international private marketThis includes assets ranging from infrastructure to real estate.

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