On the go: Master trust Nest has appointed CBRE Caledon and GLIL Infrastructure to invest £3bn into infrastructure equity by the end of the decade.
Along with Nest’s announcement in March of a £250m investment in green energy with Octopus Renewables, this is the first time a UK defined contribution pension scheme has been able to invest directly in infrastructure, the master trust stated.
These investments, which will be made in the UK and globally, represent a major step in the sophistication of Nest’s investment strategy, bringing infrastructure to at least 5 per cent of its total portfolio, it added.
CBRE Caledon’s mandate will help Nest to invest directly in global core and core-plus infrastructure projects.
The company will provide Nest with access to an infrastructure fund sponsored by the company, with the opportunity to also co-invest in select investments to help Nest members take advantage of bigger projects.
GLIL infrastructure is a joint venture between a number of major local authority pension plans.
Nest will invest in the fund along with GLIL’s members, with its open-ended fund giving access to new opportunities in UK core infrastructure.
The new investments are expected to take Nest’s portfolio in private markets up to around 15 per cent, which would be an estimated £13bn in Nest’s portfolio by 2030.
Pensions Expert has reported that the master trust is looking to work with private equity managers who are prepared to cut fees in return for a regular capital stream from the scheme.
Stephen O’Neill, Nest’s head of private markets, said: “Nest’s investment strategy is evolving at pace in line with the growth in our assets under management, opening up new assets classes in the pursuit of the best risk-adjusted returns for our members.”
He added: “We believe direct infrastructure equity investments can offer diversification benefits and a return premium to public market equities, at lower levels of risk.”
