Aviva Investors, the global asset management business of Aviva, said on Thursday that it is targeting £10 bn (€11 bn) of investments into UK infrastructure and real estate projects over the next three years, as pension funds and insurers continue to increase their appetite for such investments.
In addition, Aviva Investors expects to direct over £3.5 bn into UK structured finance and private corporate debt strategies.
Aviva Investors is already a significant investor in infrastructure and real estate via its £47 bn Real Assets business, which targets investment opportunities in both asset classes, as well as private debt and structured finance.
‘We plan to invest in the UK’s regions and cities, in critical areas such as social housing, renewable energy and rail networks. The investments being made will ultimately fund people’s savings and retirement, aiming to deliver stable returns to our customers and funding a sustainable future for the UK,’ said Amanda Blanc, CEO at Aviva.
The increase in allocation from institutional investors to real assets comes as interest rates remain low and public markets continue to suffer from heightened volatility and squeezed yields. This has led to assets under management in Aviva Investors’ Real Assets business growing by nearly 28% to £47.3 bn since its launch in May 2018.
Almost £6.5 bn of commitments will come from Aviva group companies, with the remaining amount expected to come from external client mandates.
Mark Versey, Chief Investment Officer, Real Assets at Aviva Investors, said: ‘Investors are recognising the enhanced yields they can get from holding real assets compared to the return on a comparable publicly listed security. Being backed by an asset with a tangible value means that they often carry much lower volatility too. The market uncertainty caused by Covid-19 should make the resilience of long-term cashflows offered by real assets increasingly appealing to institutional investors. With interest rates likely to remain lower for longer, we expect clients will continue to look towards the sector for risk diversification and returns.’
Aviva Investors is currently undertaking significant development projects across the UK, including two flagship buildings on Liverpool Street and Moorgate in the City of London as part of TfL’s Elizabeth Line project, as well as the redevelopment of Rosebery House in Edinburgh’s Haymarket into one of the most sustainable locations in the city. The business has also made significant investments into Manchester and Cambridge, two cities it believes are particularly well-placed to deliver strong investment performance over the long-term.
