Report: Aussie pensions mull infrastructure lending

The National Australian Bank and Industry Funds Management are in talks with several pension funds to lend money to help fund major infrastructure projects. IFM is reportedly setting up a debt fund to that effect.

Australian pension funds are considering a proposal that could see them providing loans to fund major infrastructure projects in much the same way banks do, the Australian Financial Review reports.

The proposal was reportedly originated by the National Australian Bank, one of the country’s largest financial institutions, and Industry Funds Management (IFM). Both are now said to be in discussions with some 25 pension funds on how to structure the loans, the report says. It also adds that IFM is setting up a debt fund to provide loans for major infrastructure funds.

If the report proves accurate, it could mean that Australia is joining the likes of the UK in considering ways to tap their pension funds to provide long-term debt for infrastructure projects. As reported previously on InfrastructureInvestor.com, there are ongoing discussions within the UK government on how to create conditions for pension funds to provide long-term loans for infrastructure, including guaranteeing the construction risk for infrastructure projects.

At the same time, London-based Hadrian’s Wall Capital and insurer Aviva are gearing up to launch a senior debt fund which could reach one billion, split equally between sterling and euros, targeting the UK and mainland Europe. Fund manager Duet is also raising a debt fund to provide short-term bridging facilities for projects procured through the UK government’s project finance initiative – a standardised procurement process with private sector participation.