The Pensions Infrastructure Platform (PIP) has announced it will help secure funding for the Thames Tideway Tunnel project

PIP will help secure investment commitments from UK pension schemes to the tune of GBP 370million to finance London's GBP 4.2billion 'super sewer'.

In August this year, the Bazalgette Tunnel Limited consortium, of which PIP investors are a part, received the licence from the Water Services Regulation Authority (Ofwat) to own and finance the project.

PIP chief executive Mike Weston welcomed the news.

He said: "The involvement of UK pension scheme investors in the Thames Tideway Tunnel project is fantastic, with UK pension schemes investing over a third of a billion pounds into the project."

Weston said traditionally greenfield infrastructure projects are considered too risky for pension scheme investors but the project demonstrates how they can work for pension funds.

He said: "Pension scheme investors are typically looking for low risk, long-term, inflation-linked returns that help meet their regular pension payment obligations but the Thames Tideway Tunnel is a great example of how even greenfield projects can have the risk mitigated to a level acceptable to pension funds."

Weston went on to call for the government to appoint a minister for infrastructure to oversee large projects, such as this one, that cut across a number of government departments.

"We want to see more such opportunities for UK scheme investors and our message to government is clear - if they are serious about increasing institutional investment in infrastructure then they need to ensure a long-term pipeline of opportunities is in place to give pension schemes the confidence to build their internal investment systems and capabilities."

"They must also be prepared to structure projects to deliver the low risk cash flows that pension schemes really need."

Since the first PiP fund, managed by Dalmore Capital, was launched in February 2014, PiP has helped secure over GBP 1bn of commitments from pension schemes to invest into UK infrastructure projects.

More than GBP 500m of this has been for the Dalmore PPP Equity PiP Fund, over GBP 130m for the Aviva Investors PiP Solar Photovoltaics (PV) Fund and the remainder for TTT.

First published 17.09.2015

Lindsay.sharman@wilmingtonplc.com