Infrastructure Giants Line Up For New UK Fund

Some of the world's most successful infrastructure investors have been lured to spearhead a new British vehicle created from billions of pounds of local government and public sector pension funds.

Sky News has learnt that the British Infrastructure Club (BIC)‎, which will seek to replicate the track record of leading state-backed investment funds, will be headed by Graeme Bevans, the architect of Canada Pension Plan Investment Board's (CPPIB) infrastructure wing.

The news, coming on the eve of Chancellor George Osborne's Budget, underlines the extent of the ambition to create a powerful fund capable of financing major British infrastructure projects.

Sources said on Tuesday that Mr Bevans would be joined by a team including Doug Pearce, a former chief executive of the British Columbia Investment Management Corporation, as the new vehicle's chairman.

The BIC's investment professionals will‎ include Jim Dickson, who worked on a string of deals at IFM Investors, a major Australian player.

‎Collectively, the BIC team has overseen investments in companies such as Anglian Water, Arqiva and Heathrow Airport.

Their recruitment has been engineered by Edi Truell, a leading City‎ financier who serves as Boris Johnson's pensions adviser.

The Mayor of London has been a staunch advocate of the creation of a UK sovereign wealth fund with sufficient firepower to invest in British transport, housing and other critical national infrastructure.

The BIC has been endorsed by the Government but will be controlled by its members.

Mr Truell has led the charge in persuading dozens of local government pension funds to combine their assets, with more set to follow in the coming months.

The new infrastructure vehicle is pledging to provide savings of at least £1.875bn in management costs over 15 years, based on a portfolio size of £10bn, according to sources familiar with a presentation ‎it has made to prospective members.

Such savings underline the merits of pooling smaller public sector pension funds, which each have substantial cost-bases which erode their returns.

The move to create a single vehicle focused on UK infrastructure comes as the new National Infrastructure Commission, headed by Lord Adonis,‎ prepares to oversee tens of billions of pounds of new projects during this parliament.

Mr Osborne committed on Tuesday to work on two new rail lines: Crossrail 2 in London‎ and a high-speed link between Manchester and Leeds.

Ministers continue to face criticism, however, for repeated delays to a decision about the location of new airport capacity in the South East of England.

‎The BIC team believes it will benefit from co-operation with planning and transport authorities, as well as the alignment with a national interest agenda in sectors such as energy, water and health.

"It (Other OTC: ITGL - news) will be the world's only infrastructure-focused mutual investment club dedicated specifically to the UK," said a source close to the project.

Management fees charged by Annuity Infrastructure, BIC's parent company, would fall from roughly 0.4% at £3bn under management to about 0.2% at £10bn under management, they added.

The BIC's principals could not be reached for comment.