THE Pension Protection Fund and the pension fund industry have said that they are confident of raising £2 billion in response to the Treasury's call for a new vehicle to invest up to £20bn in the UK's infrastructure.
Alan Rubenstein, chief executive of the Pension Protection Fund, said in Edinburgh yesterday that 10 to 12 core funds could contribute £1bn, which would prompt another £1bn from pension funds, and potentially a further £2bn in leverage.
He commented: "You could see how you would get to £20bn if you were sitting in the Treasury – in our world what we want to do is create a fund that can invest in infrastructure. We are doing it firstly because we think infrastructure is a good asset for pension funds, particularly when many are struggling to find assets that will match their liabilities and the yield on longer-term inflation-linked bonds is negative."
He said a £4bn fund would be "pretty sizeable", adding: "It would allow us to bid for most of the infrastructure projects that will come up in the UK in the next few years."
New "greenfield" projects, however, were not initially attractive to funds, Mr Rubenstein admitted.
One infrastructure fund manager commented later that this made meeting the Treasury's needs a "very ambitious" target.
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