UK is ripe for infrastructure investment - if its own pension funds don’t step up to the plate - others will

The head of one of Canada's largest pension funds, and prolific investor in infrastructure, has called on funds in the United Kingdom to consolidate and take advantage of the opportunities their home nation offers in that asset class

David Denson, President and Chief Executive Officer of the Canadian Pension Plan Investment Board (CPPIB), said due to their relatively small size, pension funds in the UK should aim to link up to take advantage of the 'infrastructure gap' or shortfall between plans and funding in the country:
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UNISONActive readers are well aware of the debate over the Local Government Pension Funds and their need to consolidate. But here is an external expert telling the government to get on with it. The comments follow a mooted move by some public sector pension funds, led by the London Pension Funds Authority to unite for the purposes of infrastructure investment.

The UK government is already working with the National Association of Pension Funds and the Pension Protection Fund to create an infrastructure investment project worth £2 billion.

Denson said: "Over and above encouraging pension funds to operate as long horizon investors and own infrastructure assets, we believe the UK government should also address policy issues that will enable them to do so."

One of these issues was to encourage consolidation of small plans to create funds with sufficient scale to invest in infrastructure.

The CPPIB boss was speaking in London at an event held by the Canada - UK Chamber of Commerce yesterday.

Denson said the UK was already ideally placed to help nurture this type of investment. He said: "This country has had a long history of private ownership of key infrastructure such as ports, rail, airports, water, gas and electrical distribution among others. That critical public policy decision, including allowing non‐domestic ownership, has already been made, whereas many other jurisdictions are still wrestling with it on a philosophical basis."

Denson said the CPPIB, as a global investor, ranked the UK alongside Australia and Chile as one of the best targets for infrastructure investing, in terms of legal, tax and regulatory issues.

He also warned: "So while it may still be uncertain whether significant numbers of UK pension schemes will become owners of infrastructure assets in this county, I can definitely confirm that the CPPIB, and other organizations with our orientation and capabilities, will be willing buyers if the UK government expands the supply of privatized assets."