We have a lot of UK pensioners to think about and would like to invest in even more projects and companies which can improve local economies and benefit communities across the UK. In reality, there is only a finite number of infrastructure projects and issuers which match our investment parameters in the UK. As well as helping to stimulate the UK market, we are, therefore, also financing projects elsewhere in the world, including continental Europe.
The government can play a role in attracting capital for large projects that transform the infrastructure landscape by setting the right regulatory framework to allow institutions such as PIC to invest. This may be addressed from an insurance per- spective by the reforms to Solvency II, but it needs to go wider.
An example of a project we financed a few years ago is the Thames Tideway Tunnel, a sewer underneath London which protects the Thames from pollution. The project had a pretty comprehensive regulatory framework attached to it along with a support package provided by the government, which allowed institutional capital to finance it.
We wish to finance more of these large civil engineering pro- jects, which are ideally suited to provide stable, predictable long-term cashflows to match our pension liabilities.
Who is putting institutional investors and infrastructure projects together? Romashkan: You source them yourself. Sizewell C [a proposed nuclear power plant] is coming up and the group behind it has been quite vocal about the need for equity.
It takes a while to invest in greenfield infrastructure projects. They are not only long term, but have long build-up periods, too. We are not seeing much from the government, so we have to do it ourselves or look beyond the UK. For us, Northern and Western Europe are interesting jurisdictions. Dusch: As an asset manager, if you depend on government infrastructure plans to source your deals, you might be too late by the time such projects are live.
Of course, it is key to be close to governments to understand and anticipate the forthcoming trends and offer proprietary investments to our investors. The key to sourcing deals is to
18 December – January 2023 portfolio institutional roundtable: Infrastructure
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