* To build in-house expertise for infrastructure investments
* Pension fund, insurance savers targeted
By Raji Menon
LONDON, Oct 31 UK asset manager Aviva Investors
is preparing to launch a range of funds to invest in
infrastructure projects as it looks to win a bigger chunk of
pension fund cash.
The fund management arm of Britain's second-biggest insurer
Aviva is developing funds that will buy stakes in
projects or provide debt funding, interim Chief Executive Paul
Abberley said in an interview on Tuesday.
Aviva's existing funds hold nearly a billion pounds in
third-party infrastructure assets through a combination of
infrastructure debt, real estate and renewable energy funds. But
Aviva wants to multiply this several times by tapping pension
funds and other institutions.
With volatile equity markets and historically low interest
rates, more and more pension funds are becoming interested in
"real assets" such as roads, schools and hospitals.
To meet this demand, fund managers investing billions of
pounds on behalf of UK pension funds, are hiring infrastructure
teams or adding to their existing staff to help to channel cash
into these types of investments.
"Insurance-owned asset managers are a natural intermediary
between the flows of long-term savings that go into insurance
companies and the capital currently required by borrowers. Given
the longer investment time horizon on these savings, one obvious
investment target is infrastructure," said Abberley.
Aviva Investors currently has an infrastructure team of
about six but Abberley said the firm could hire externally if it
felt it necessary.
As part of a restructuring aimed at streamlining its asset
management business and reducing costs announced in January,
Aviva Investors cut some 160 jobs or 12 percent of its global
The overhaul resulted in senior management departures
including that of chief executive Alain Dromer.
Aviva Investors, which has about 274 billion pounds ($439.06
billion) in assets under management, saw operating profits fall
to 34 million pounds in the first half of the year, compared
with 39 million pounds in the previous year, partly due to lower
Abberley said the firm was tailoring its products for
risk-averse investors seeking more stable returns.
"Our clients are operating in a world of negative real
returns in low-risk, fixed-income assets and potentially a world
of financial bubbles in riskier assets," Abberley said.