AustralianSuper on track to deploy £18 billion in UK by end of decade

The $300 billion fund has doubled down on the UK as an “attractive location” to deploy capital, committing a fresh £8 billion by the end of the decade.

AustralianSuper expects to hold an investment portfolio of over £18 billion in the country by 2030 with large-scale, long-term opportunities across sectors like transport and logistics, digital infrastructure, mixed-use estate, and the energy transition.

The fund, which opened a London office in 2016 and has since grown to more than 100 staff members, has some £8 billion currently invested in the UK.

This includes real asset investments such as a 32 per cent interest in Peel Ports Group, the UK’s second largest ports group; 74 per cent in the King’s Cross Estate, one of most significant urban transformations in London; and 27 per cent interest in Vantage Data Centers EMEA, one of the fastest growing hyperscale data centre platforms in the region.

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The fund also holds more than £2.5 billion in UK-listed equities and manages £9 billion of its £30 billion global fixed income securities out of the UK, including exposure to UK government bonds.

Paul Schroder, AustralianSuper chief executive, said the fund has built “strong partnerships with like-minded industry leaders and capital providers” since establishing its London office.

“These relationships reflect our approach to direct investing and value creation during ownership, where we’re focused on effective stewardship to generate sustainable returns for more than 3.3 million members,” he stated.

“Despite ongoing global economic uncertainty, the UK remains an attractive destination for global investors like AustralianSuper which is evidenced by our forecast £8 billion commitment to the market over the rest of this decade.”

The fund has predicted that £7 of every new £10 invested will be deployed outside Australia as it steadily expands its international investment capabilities.

Under the UK-Australia free trade agreement, which came into force on 31 May 2023, comprehensive provisions on investment have increased the appeal of the UK for foreign investment.

UK Prime Minister, Rishi Sunak, described AustralianSuper’s announcement as a “vote of confidence” in the British economy.

“We’ve already halved inflation, debt is forecast to fall, and – with thanks to smart investors like AustralianSuper – we’re on course to grow the economy,” he said.

Earlier this year, the super fund had flagged private markets and direct investing as a key area of focus in the new year.

“AustralianSuper has been successfully internalising its investments for many years in a range of asset classes and will continue to do so, particularly globally and in private markets,” the fund’s head of asset allocation, Alistair Barker, told Super Review.

“This means the focus for the investment team is to do more private market investing and more direct investing, with the aim of accessing deals early and at lower cost.”

He said its London and recently opened New York offices will continue to support this, with the international teams now covering the full spectrum of investment capabilities including infrastructure, property, private credit, fixed income, capital markets, private equity and international equities.

“We’re keen to continue to exploit our ability to do these sorts of deals and be flexible in capital allocation, so we can target the best opportunities. This is [the] significant advantage for members that comes from our size and approach,” he stated.

AustralianSuper is forecast to grow to over $500 billion over the next five years. It has some $40 billion invested in the UK and Europe, and close to $85 billion currently invested in the US.