UK university pension scheme builds on infrastructure mandate

LONDON, March 27 Wed Mar 27, 2013 3:02pm EDT

LONDON, March 27 (Reuters) - Britain's second largest pension scheme has acquired Brisbane's air train service in Australia that sees it bump its investment into global infrastructure projects up to 2.4 percent of its total assets.

A subsidiary of the Universities Superannuation Scheme Limited (USS), USS Axle Pty Limited, has acquired Australia's Brisbane Airtrain in a $110 million (AUS) deal, the pension fund said on Wednesday.

USS said it wants to eventually invest up to 7 percent of its total 36 billion pounds in assets in infrastructure over the "medium term".

On the same day, USS announced the appointment of new chief executive Bill Galvin, as the pension fund seeks to increase its investments in infrastructure and buying stakes in companies directly.

Big investors like pension funds are increasingly investing into assets themselves, tired of the hefty fees charged by private equity firms and wanting more say over what they buy .

The Brisbane deal folllows a larger Australian deal in the private infrastructure sector in October 2011, when USS acquired ConnectEast the owner and operator of the EastLink.

The motorway connects the Eastern Freeway in Melbourne's east to the Frankston Freeway in the south.

USS has been boosting its investments in infrastructure, as European pension funds look for investments that offer stable returns at a time of rock-bottom interest rates and volatile shares.

Pension funds such as USS, JP Morgan Asset Management , Macquarie Capital have been adding staff to their infrastructure teams, with USS - with 36 billion pounds in assets - raising their infrastructure allocation to 7 percent of total assets.

Bill Glavin, the current chief executive of the Pensions Regulator will join USS as group chief executive in August 2013, USS said on Wednesday - replacing Tom Merchant, who will retire after ten years with USS.

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