L&G aims for £16.5bn UK regeneration fund

The UK insurer has invested £1.5bn in the vehicle, which will target equity and debt positions in housing and infrastructure projects across the country.

Legal & General today launched an investment fund focused on regeneration projects for which it aims to collect commitments from UK and international institutions of up to £16.5 billion (€20.0 billion; $22.8 billion).

The figure includes an allocation of £1.5 billion from the insurer itself, which will also act as the vehicle’s manager. In a statement stating the initiative’s mandate in fairly loose terms, L&G said the fund would target both equity and debt investments in different sectors across the UK.

“External investors’ economic and reputational interests are therefore closely aligned with L&G’s, and with L&G as the investment manager external investors have access to local knowledge and expertise.”

The vehicle will not be averse to taking construction risk, L&G added, and will aim to invest in about 30 to 50 housing and infrastructure projects. The company explained that the initiative expanded on a model L&G is already applying for specific projects in UK cities including Salford, Canning Town, Plymouth, Bracknell and London.

The Regeneration Investment Organisation, the UK government’s agency dedicated to channelling foreign investor interest into UK regeneration projects, has been mandated to help with the formation of a deal pipeline and work with central and local government on infrastructure projects.

“L&G’s decision … is fantastic news and a vote of confidence in the UK economy and our regional cities,” said Greg Clark, UK Minister for Cities.

L&G and fellow UK insurers Prudential, Aviva, Standard Life, Friends Life and Scottish Widows, in December 2013 committed to invest £25 billion in infrastructure over five years.

Today’s move comes hot on the heels of L&G’s decision to merge its infrastructure and property teams to form a single real assets division last week. The new unit is headed by Bill Hughes, who previously was managing director of the company’s property business.