The UK’s state-backed pension scheme, National Employment Savings Trust (Nest), has announced a landmark £5 billion investment with Australian infrastructure giant IFM Investors. The move represents one of the largest private market commitments ever made by a UK pension fund and aligns with Chancellor Rachel Reeves’ initiative to drive greater pension fund investment into private markets.
Strategic Investment in Infrastructure
As part of the deal, Nest will join 16 Australian funds in acquiring a stake in IFM, the world’s fourth-largest infrastructure investor. The partnership will initially focus on seeding a Europe-focused infrastructure debt fund while expanding investments into infrastructure and infrastructure technology-focused private equity, with a strong emphasis on the UK market. Nest will also acquire a 10% stake in Industry Super Holdings, IFM’s parent company.
Mark Fawcett, Nest’s chief executive officer, emphasized the scheme’s commitment to domestic investment, stating, “We definitely want to have a UK bias. If we can help the UK economy and create jobs, that’s good for our members.”
Expanding Private Market Exposure
The investment aligns with Nest’s long-term strategy to increase its allocation to private markets from the current 17% to 30% by the end of the decade. Currently, 40% of its £8.5 billion private market investments are in the UK.
Across defined contribution pension funds, the average allocation to private equity and infrastructure remains low, at just 4%, according to think tank New Financial. The UK government has been actively encouraging pension schemes to pool resources and invest more heavily in private markets to stimulate economic growth.
By partnering with IFM, Nest aims to accelerate its private market expansion while maintaining cost efficiency. “We outsource all of our fund management now. Why wouldn’t we partner with one of the world’s best infrastructure and private markets managers?” Fawcett said.
IFM’s UK Growth Strategy
IFM has already committed to investing £10 billion in UK infrastructure and energy projects by 2027. The firm, which manages A$230 billion (£115 billion) in assets, has a strong presence in the UK, with holdings including the M6 toll road, telecoms firm Arqiva, and major airports such as Manchester, Stansted, and East Midlands.
David Neal, CEO of IFM, highlighted the UK’s investment potential, stating, “This transaction underlines our commitment to the UK. This is our European headquarters, and we are expanding our presence here.”
With Nest’s significant commitment to private markets and IFM’s established infrastructure footprint, the partnership is set to drive long-term investment into critical UK sectors, supporting both economic growth and pension fund returns.
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