Australian investors have pledged to spend £28.5 billion across the UK on clean energy, technology and infrastructure projects over the next decade, the UK government announced on Wednesday.
Boris Johnson, UK Prime Minister, met with leading Australian companies, including financial services firm Macquarie Group and infrastructure fund IFM Investors, to encourage new investment in the UK to spur an economic recovery as the pandemic subsides.
The £28.5bn consists of a combination of new and previously announced commitments.
Listing a number of wind farms, property developments and new green infrastructure that he said companies wanted to invest in, Johnson said: ‘This is Global Britain in action – building new partnerships with friends and allies around the world to create prosperity at home. ”
Australian pension funds have been active investors in the UK for decades in major property and infrastructure projects, including the redevelopment of King’s Cross in London, as well as in water, gas and telecommunications.
However, on Wednesday IFM Investors urged the government to do more to attract more foreign capital to the UK.
David Neal, chief executive of IFM, has pledged to invest £3bn over the next five years in new net-zero projects and to upgrade IFM’s existing UK assets, including the M6 toll road and Manchester, Stansted and East Midlands airports.
But he said the IFM and foreign pension funds would be willing to do more if the UK government took a bigger share of the risk in the development of infrastructure projects and ceded more control over infrastructure projects to exchange of long-term support by offshore partners.
“The key is to bring this to the private sector in an acceptable way and create a good opportunity for our pension fund members,” he said. “There’s no point handing over an equity check if you don’t have influence over things like construction.”
UK infrastructure investors have been calling for a replacement of the private finance initiative since it was scrapped in 2018. But the government has favored the regulated asset base model, which is used for water companies and utilities. airports, to advance private sector investment in new projects such as nuclear power plants.
The £28.5bn includes Macquarie’s plans for at least £12bn of investment by 2030 in water assets, wind farms and gas networks.
Energy and chemicals group Worley said it would expand its UK business with more than 1,000 new jobs over the next 18 months. A similar number of roles are promised by renewable energy company Fortescue Future Industries after it acquired Williams Advanced Engineering in Oxford this month.
However, Mathew Lawrence, director of Common Wealth, a think tank, argued that critical infrastructure should be owned by the state. “The track record of private investors owning vital infrastructure in the UK has not been good for consumers, businesses or the environment,” he said. “Debts soared, dividend payments jumped and performance was uneven.”
The pledges come amid a recent wave of international deals for Britain’s infrastructure, which provide long-term guaranteed stable income backed by the government.
National Grid on Sunday sold a 60% stake in its UK gas transmission business to a consortium of investors in Australia and North America, led by Macquarie. Danish energy company Ørsted on Monday sold a 50% stake in its Hornsea 2 wind farm development project to French bank Credit Agricole and insurer Axa in a £3bn deal.
Macquarie is also making an offer with private equity group KKR to buy Britain’s largest electricity distributor, UK Power Networks, from companies controlled by Hong Kong’s billionaire Li family.
Additional reporting by Chris Flood