Landmark infrastructure investment deal agreed

GLIL Infrastructure (GLIL) has been appointed as an infrastructure investment partner for Nest, the government-established workplace pension provider and secured an initial capital injection to the fund.

GLIL, an open-ended fund established in 2015 to drive direct investment in core UK infrastructure, supports the long-term objectives of pension funds and local authority pooling. The agreement with Nest takes GLIL’s total capital to around £2.5bn and follows a further £500m capital commitment from the fund’s incumbent local government pension fund members. 

The procurement is part of Nest’s commitment to deploy £3bn of investment capital into infrastructure in the UK and around the world, by the end of the decade. GLIL’s investments to date include equity stakes in Anglian Water, Clyde Windfarm, Forth Ports, two fleets of trains with Rock Rail, a portfolio of PPP assets and investments in biomass and anaerobic digestion energy generation. Most recently, in November 2020 it acquired a 30% equity stake in Agility Trains East, a rolling stock fleet of 65 new intercity trains on the East Coast Mainline.

Ted Frith, COO at GLIL Infrastructure, said: “Infrastructure investment is absolutely critical to supporting the UK’s recovery and building a sustainable economy for the future, and pension funds like Nest can play a fundamental role in helping to fund those projects. This initial capital commitment has expanded our fund to around £2.5bn. The increase in financial firepower enables us to target new opportunities, potentially expand our holdings in current investments, and scale up our investment ambition – all to the benefit of our investors and the pension members they serve across the country.

“GLIL investors share Nest’s long-term investment horizon and sustainable investment objectives and look forward to building an enduring relationship with the team to bring the benefits of infrastructure investment to millions of workplace pension holders.”

Stephen O’Neill, Nest’s head of private markets, said: “Nest’s investment strategy is evolving at pace in line with the growth in our assets under management, opening up new assets classes in the pursuit of the best risk-adjusted returns for our members. Within current forecasts we believe infrastructure equity will match and likely outperform developed market equities for the coming decade, at lower levels of volatility.

“I’m therefore excited to announce these new partnerships. After a very competitive procurement, we’ve emerged with excellent fund managers that can deliver exactly what we were aiming for. GLIL is a unique entity, showing the benefits that can be had when pooling resources and seeking innovative ways to help pension schemes fully utilise the benefits of being long-term investors. 

“We’re delighted our members can benefit from investments that have previously been out of reach for auto enrolled savers. We’ll have the ability to invest in a project on the other side of the world, giving us diversification across geographies and types of construction. Equally, we represent 9.5m UK workers. Using their contributions to support new infrastructure projects not only allows them to boost their pension, but also invests in their future.”