Two Australian pension heavyweights have pledged billions for European markets, through government projects as well as their own offices.
ADVERTISEMENTIFM Investors, owned by a mammoth collection of 17 Australian pension funds, such as Hesta, Vision Super and CareSuper among others, has pledged $12.6 billion (€11.51 billion) for UK energy and infrastructure projects in a deal that is likely to cover projects until 2027.
All of this was announced at the London Global Investment Summit on Monday, which also resulted in some other huge announcements.
Australian Superannuation fund Aware Super revealed that it will be allocating $6.6 billion to its London office, primarily towards infrastructure, real estate and private equity projects. This is in addition to the $17 billion the company has already put into the UK and EU.
The company also said it plans to explore the affordable housing, digital infrastructure and energy transition sectors, as well as the technology, innovation and life sciences verticals.
It comes as the UK has thrown its investment doors wide open, especially for energy, infrastructure and climate-related projects.
The IFM Investors head of infrastructure for Europe, Deepa Bharadwaj, said in a statement: “The UK is taking steps to help facilitate long-term investment in infrastructure and we currently see significant deployment opportunities, particularly as part of the UK energy transition, in areas such as offshore wind, solar, battery storage, renewable fuels and pumped hydro.”
IFM Investors and Aware Super are the latest to jump on the current Australian trend of pension funds looking to expand their investments abroad.
Australia’s biggest pension fund AustralianSuper is a prime example, with the company having opened its UK office in 2016 and its New York office in 2021. It has also highlighted that it plans to double its international team in the next three years.
Australian Retirement Trust, the country’s second-largest pension fund, also announced back in August that it would open up its first international office in London by mid-next year. This will be mainly to help private equity and debt managers reach more clients and hopefully be able to close more deals, especially co-investment ones.
Although the company has highlighted that it wants to keep the London office small, depending on how that goes, it may consider another global office in the one or two years later.
Why are Australian pension funds so interested in the UK?
One of the key reasons for this recent Australian interest is to take advantage of the Australia-United Kingdom Free Trade Agreement, which entered into force earlier this year.
European culture in general is also quite aligned with Australia’s, somewhat reducing culture clashes and local market woes, in turn increasing ease of business.
Furthermore, the UK is considered key in opening up new markets both across European and North American markets, which is in line with several Australian funds’ global investment and expansion strategy. Being in the same time zone as clients is considered especially crucial for pension fund managers to build good client relationships.
In the UK, the City of London and the Department for Business and Trade have also been considerably welcoming to foreign investments, extending support to these companies.
