UK pension fund invests in Scottish roads through listed project bonds
The Telent pension fund has become the first UK scheme to enter an infrastructure debt platform using listed project bonds, as it looks to develop Scotland’s road system.
Using the Allianz GI infrastructure debt platform, the pension fund is one of the investors in a £175m (€212m) investment into major Scottish roads.
The German investment manager has committed to the purchase of listed project bonds, which will be issued by Scot Roads Partnership Finance.
The bond purchase will finance the planned design and construction of roads, which will form part of the motorway improvement project for the centre of Scotland.
A £175m debt funding will be combined with further funding from the European Investment Bank to finance the project.
Allianz GI said the deal was the first UK listed project bond arrangement that also featured a deferred settlement mechanism, which should mitigate negative carry.
It also said the investment by Stanhope Pension Trust, the trustee for the Telent pension scheme, was the first of its kind by an institutional investor.
Adrian Jones, part of Allianz GI’s infrastructure debt team, said he expected more institutionals to invest in similar deals, now that such a milestone had been reached.
“UK pension trustee Stanhope Pension Trust is one of an increasing number of third-party investors electing to invest via Allianz GI to gain access to this asset class,” he added.
The news of the investment comes after a survey, conducted by analytics firm Preqin, found 84% of current infrastructure investors were looking to either maintain, or increase, their allocations to the asset class.
The majority of the 430 investors polled by the firm said they anticipated making a minimum of three allocations to infrastructure funds this year, looking to invest around $100m.
Fellow UK scheme Strathclyde, the largest local authority fund, also saw a ramp-up in its infrastructure investment, as it joined a consortium looking to purchase Glasgow Airport.
The fund is also a seed investor in the National Association of Pension Funds and Pension Protection Fund’s infrastructure project, the Pensions Infrastructure Platform.