Aviva Investors, the global asset management business of Aviva plc (Aviva), plans to invest £10 billion in UK infrastructure and real estate projects over the next three years.
Aviva Investors said the investments will support job creation in the infrastructure and real estate industries in cities and regions across the UK.
In addition, Aviva Investors expects to direct over £3.5 billion into UK structured finance and private corporate debt strategies.
Aviva Investors is already a significant investor in infrastructure and real estate via its £47 billion Real Assets business, which targets investment opportunities in both asset classes, as well as private debt and structured finance.
“Aviva is investing in UK infrastructure and real estate to help our economy and communities bounce back.”
“Aviva is investing in UK infrastructure and real estate to help our economy and communities bounce back. 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 plc.
”With the UK facing a sizeable funding shortfall in meeting its infrastructure needs, £10 billion of capital will support the development of UK real estate and infrastructure, including renewable energy projects in-line with the government’s long-term commitment to meet net-zero emissions by 2050.”
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 billion since its launch in May 2018. Almost £6.5 billion of commitments will come from Aviva group companies, with the remaining amount expected to come from external client mandates,” she added.
“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,” said Mark Versey, Chief Investment Officer, Real Assets at Aviva Investors.
“Investing in real assets has an important social and economic benefit; funding everything from new offices and student accommodation to renewable energy facilities and rail infrastructure. They can also deliver better investment outcomes for employee pension schemes and insurers, whilst creating jobs in local communities. As a long-term investor, we recognise the impact we can have, from regeneration work in partnership with local authorities, through to creating renewable energy networks as part of the UK’s sustainable future. It’s important we better-connect investors with the assets they own and demonstrate the value that their investments can have in local communities and society,” added Mark Versey.
Aviva Investors’ Real Assets business currently has £47.3 billion in asset under management, making it one of Europe’s largest managers of alternative investments.