(October 22, 2013) – The Universities Superannuation Scheme Limited has agreed to acquire 8.65% of FGP Topco Limited, the holding company which owns Heathrow Airport, for £392 million.
The investment, arranged by USS Investment Management (USSIM)—a wholly owned subsidiary of USS and its principal investment manager and advisor—will form part of USS’s infrastructure portfolio and is its largest investment in UK infrastructure to date.
USS has long been attracted to infrastructure, saying it was well suited to its inflation-linked liabilities.
Chief executive of the USSIM —and aiCIO Power 100 member—Roger Gray explained that he believed investment in UK infrastructure was a “win-win” for investors, promoting economic growth and jobs while providing attractive investments for the trustee board in meeting its commitments to members.
“This transaction represents a long term investment by USS in the future of London and the UK,” he added.
USS is one of the UK’s largest pension funds, with almost £40 billion in assets. The fund won the asset allocation category at aiCIO’s European Innovation Awards in May.
USS isn’t the only one banging the drum for UK infrastructure: Earlier this year, Pension Insurance Corporation urged the UK government to rethink how it is selling infrastructure investment opportunities, and to set up a specialist investment bank to help.
Mark Gull, co-head of asset and liability management at Pension Insurance Corporation, said at the time: “Risk free yields have been explicitly forced down by policy, pushing up pension liabilities. The government should now seek to increase the supply of suitable risk assets to help trustees support their pension liabilities.
“Ultimately, what is required is a major shift in the government’s understanding of investors’ requirements.”