Preqin’s Infrastructure Online service currently tracks 170 Europe-based private sector pension funds investing in the infrastructure asset class. The top 25 Europe-based private sector pension funds, by allocation to infrastructure, have aggregate assets under management (AUM) of more than €392bn. On average, these top 25 private sector pension funds have a current allocation to the asset class of 3.5%, lower than their average target allocation of 5%. As a result, more capital is likely to flow into infrastructure as these private sector pension funds continue to move towards their target allocations.
Sixteen of the top 25 Europe-based private pension funds are located in the UK, representing an aggregate €9bn in commitments to the asset class, with an average allocation of approximately 2% of total assets to infrastructure. Three of the top 25 investors are based in the Netherlands and Switzerland respectively.
With regard to how these investors allocate to infrastructure, 14 of the top 25 Europe-based private sector pension funds have established separate infrastructure allocations, while two invest through a general alternatives allocation. The remaining six investors invest in the asset class through part of a real assets or private equity allocation, part of an opportunistic investments allocation, or other types of allocation. Top Europe-based private pension funds will consider different routes to market for future investments in infrastructure, although all 25 of the top private sector pension funds favour investment via unlisted funds. Twenty-one percent will consider investing in infrastructure assets directly, and 8% will do so via listed funds.
TfL Pension Fund is one example of a Europe-based private pension fund planning to invest in infrastructure in the coming 12 months. The pension fund will seek opportunities in a diverse range of social and economic infrastructure assets on an opportunistic basis via unlisted infrastructure funds, its favoured route to market. Additionally, the Berlin-based pension fund, BVV, will invest in infrastructure via its recently established €250mn target allocation to the asset class. Through this, it will target a diverse range of industries with a preference for brownfield stage assets.