What infrastructure projects are you expecting to see as part of the government’s build back better plans? Ted Frith: We have received a couple of letters from the chancel- lor, but he is asking the wrong question.


Instead of asking how much money we have, he should be highlighting the projects that require financing and how we might go about investing the capital we have already commit- ted to UK infrastructure. Tom Sumpster: There is a wall of money available to invest in the build back better political theme. A difficulty we face are the regulatory restrictions on how pension funds can make investments. We and GLIL have the capability to invest in the broader finan- cial markets. If the regulator could be more flexible with how they allow us to invest it would provide a wealth of opportuni- ties for large institutional investors to make a statement in sus- tainable investing and supporting government initiatives. Christine Farquhar: Aggregation of capital is top-of-mind with a lot of investors. Being a seed investor or gathering money through a fund structure, getting that money to work is the challenge. Assets such as infrastructure and clean energy are financially viable, so the issue is: how can investors direct capital to them safely. Frith: The UK Infrastructure Bank, which we are engaging with, could play a big role as the broker between the providers of capital and the different risk-profile projects, which range from a couple of million to billions of pounds. You need a broker to manage that process and marry the vary- ing demands of the capital providers. Sumpster: The European Investment Bank took an early role in renewables when offshore windfarms were not seen as stable investments for pension fund investors. We need to be guided and form partnerships with multilateral organisations and governments because today’s taxpayer is tomorrow’s pensioner, so we are investing for the same person. We need to speak with the UK Infrastructure Bank because we want to co-invest, we want strong partnerships with the public sector and multilateral organisations to ensure we maximise the economic and social value of our investments. Frith: We are supportive of what the government is trying to achieve. We have made a couple of suggestions that might expedite what they are trying to do. Julien Halfon: The distribution structures are another hurdle. Defined contribution pension plans have a fee cap and funding SMEs is expensive.


A fee cap of 50 basis points means we can only talk to large investors or defined benefit schemes, but not defined contribu- tion plans, which would be the best possible investment for their younger demographic.


8 Dec-Jan 2022 portfolio institutional roundtable: Build Back Better


If there are restrictions on fees and liquidity, an enormous amount of the population is prevented from investing in something that could


benefit them. Julien Halfon, BNP Paribas Asset Management


At the other end of the spectrum, we see several strange opera- tional limitations, such as defined contribution funds having to make highly liquid investments. Why would you need this if you are saving for 30 years?


That creates a lot of frictions when trying to invest in large illiq- uid projects. If there are restrictions on fees and liquidity, an enormous amount of the population is prevented from invest- ing in something that could benefit them. We are getting into a situation where mass-market utilities should go to smaller investors who could see the impact of their money. But the set-up is preventing almost anything from happening.


On top of that, many providers are not improving their plat- forms. This blocks innovation and limits defined contribution investment to ultra-liquid assets. Farquhar: Our database has 600 managers and more than 1,000 dedicated impact strategies. It is not only about infrastructure. We have healthcare, social housing and private credit. Those 1,000 strategies are ready and many are waiting for new capital.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28