5.17 HM Treasury has signed a Memorandum of Understanding with the National Association of Pension Funds (NAPF) and the Pension Protection Fund to work together to help establish a platform to facilitate increased pension fund investment in infrastructure. The pension infrastructure platform will be wholly owned by pension funds, and will allow them to invest in key UK infrastructure assets and projects. NAPF members have approximately £800 billion of assets under management and pension funds have indicated that they would expect to be able to increase their allocation to infrastructure from the historical level of 2.5 per cent if they had a suitable platform through which to invest.
5.18 A separate group of UK pension funds and infrastructure fund managers representing at least £50 billion of funds under management have also come together to develop detailed proposals for more early stage institutional investment in greenfield infrastructure, with the aim of significantly increasing funding from the earliest stages of construction through to operation and beyond. Meridiam Infrastructure, the Greater Manchester Pension Fund, the London Pensions Fund Authority and Hermes GPE, which are investors in greenfield, construction phase projects, either directly or indirectly through funds for diversification, have signed a memorandum of understanding (MOU) with the Treasury and over the coming weeks will work together with a number of other UK pension funds, predominantly corporate pension plans, on proposals to attract increased allocation of funds from pension funds for long term investment.
5.19 The Government is targeting up to £20 billion of investment through these initiatives.
5.20 Insurance fund managers are another important component of the institutional investor community so the Government will be setting up an Insurers' Infrastructure Investment Forum with the Association of British Insurers to explore ways to ensure that the capital markets continue to provide an efficient and attractive source of debt finance for infrastructure projects. This will include addressing the impact of potential regulatory changes in the insurance sector.
5.21 Further, the Government is taking action to ensure that the UK market benefits from investment by overseas investors including sovereign wealth funds. Following the signing of a memorandum of understanding with the Chinese government in September 2011, the Government will shortly establish an Infrastructure Task Force to facilitate greater cooperation between UK and Chinese enterprises in the field of infrastructure development. In addition, the Government continues its dialogue with significant overseas institutional investors in the Middle East and elsewhere to expand the sources of capital available to UK infrastructure developers in meeting their investment objectives.