Government, super funds to increase UK collaborations

Australia and the UK have signed an Investment Partnership to further unlock superannuation and pension capital investment, which will help to secure more "two-way" investment in jobs and industries, as well as strong returns for investors for both nations.

The partnership will focus on policy dialogue and expertise and reducing barriers to cross-border investment and promoting strong investment settings. It will also establish network-building to help facilitate investment opportunities that benefit members in both countries.

The MoU was signed by UK Chancellor of the Exchequer Rachel Reeves and Australian Treasurer Jim Chalmers on the sidelines of the meeting of G20 Finance Ministers and Central Bank Governors in Washington DC.

"Australia and the UK share a longstanding economic partnership, and institutional investors in each market play a significant role in supporting economic growth," Chalmers said.

"More trade and investment between Australia and the UK is in the interest of both countries, and that's what this MoU is all about.

"Its goal is to support an investment environment that helps superannuation and pension fund capital flow more easily in support of economic growth."

Australia's super pool is the fourth largest in the world, with assets totalling $4.5 trillion. The UK's pension market is the second largest globally, holding assets worth more than £3 trillion ($5.7tn). Access to this capital has the potential to drive growth in both economies.

By seeking out global investment opportunities, Australian super funds and UK pension funds are building diverse and resilient portfolios that can help deliver long-term retirement outcomes, Chalmers said.

"The MoU provides a framework for governments to work more closely together to support investment opportunities. This could include in areas of shared interest such as housing, renewable energy, infrastructure and venture capital. It will enable structured engagement between the Australian super funds and the Sterling 20 through joint missions, strengthening our investment environment and increasing the visibility of investment pipelines," he added.

"The MoU does not direct how funds invest. Each fund remains fully independent to act in the best financial interest of their members."

It comes as super fund leaders are meeting with government officials and industry leaders in France and the UK this week, seeking long-term global investment opportunities, IFM Investors said.

The Australian delegation will meet with senior French political leaders, public financial institutions, infrastructure leaders, private investors and the OECD to discuss opportunities for long-term capital investment in France between April 20 and 22, and the UK on the following day.

The discussion will revolve around the enablement for super funds to deploy more capital into European and the UK private markets, including for priority, high-quality infrastructure projects.

The cohort includes IFM Investors, AustralianSuper, Australian Retirement Trust, Aware Super, Cbus, HESTA, Rest, and the Super Members Council. NEST, the UK's largest workplace pension scheme and a shareholder in IFM Investors, is also part of the delegation.

Collaboration overseas strengthens outcomes at home, giving millions of Australians access to some of the largest markets around the world - along with deals that grow their retirement savings, IFM Investors said.

Super funds have already been investing over many years in French and UK infrastructure assets, including investments through ERG - a European renewable energy operator with 605 megawatts (MW) of installed wind capacity, 128MW of solar capacity, and Atlas Arteria - a company that operates 2424km of French toll roads.

Commenting, AustralianSuper head of investments, Europe Joris Hillmann said the super fund is committed to access quality investment opportunities around the globe.

"Europe offers deep, sophisticated markets, and we see opportunities to invest in ways that benefit members and local economies. We look forward to engaging Government and industry stakeholders to discuss deepening ties for our mutual benefit," Hillmann said.

"France is a natural market for a global investor like AustralianSuper, with mature markets, a strong infrastructure ecosystem and clear long-term need for patient capital.

"AustralianSuper is pleased to continue the conversation with the French Government on unlocking further investment and collaboration into the future."

Meanwhile, Cbus head of private markets and infrastructure investments Jordan Kraiten said: "With approximately 20% of our infrastructure portfolio deployed across Europe and the UK, we see opportunity to further expand our presence."

"Strong institutional alignment, stable regulation and deep, diverse and mature markets make it a natural fit for long-term investors focused on delivering strong member outcomes."