(Bloomberg) — London-based asset manager Aviva Investors is tapping Australia’s pension funds to partner in private deals in the UK and Europe, as the surging pool of retirement savings lures more offshore suitors.
The firm, which manages 262 billion euros ($284 billion) of assets globally, has been talking to some funds about co-investments in logistics centers and residential developments, said Head of Real Asset Equity Specialists Tom Graham. They’re looking at a range of deal sizes up to A$1 billion, he said.
Aviva Investors, part of insurer Aviva Plc, is seeking to strengthen its existing ties with Australia’s A$3.7 trillion pension fund industry, which has added about A$1 trillion of assets since 2019. It’s part of the firm’s push to double its real assets portfolio, currently worth 48 billion euros, over the next five years.
“To do that, we need to be doing more at scale and naturally, globally,” London-based Graham, who met funds in Melbourne and Sydney last month, said in an interview. “There’s a finite audience that can really operate at that kind of scale.”
Some of Australia’s largest pension funds have already made big inroads into the UK and European markets. AustralianSuper, the nation’s top pension, recently pledged to pour more than 8 billion pounds into large-scale investments in UK over the next six years. Both that fund and Aware Super have London offices and are hiring to build them out.
Graham highlighted residential opportunities in Spain and the UK, where there was development potential due to housing shortages. Meanwhile, there were both investment and development opportunities in logistics properties across Europe due to undersupply in some areas, he said.
Australia’s pension funds were now seen as offering similar size and scale to their large Canadian and European peers, along with Middle East sovereign wealth funds, Graham said. Australian pension assets are forecast to more than triple to A$13.6 trillion by 2048, a Mercer report said this month.
UK pension funds have been under pressure to funnel more into investments into the UK. Graham said the UK system was still transitioning into a defined contribution system, where wages are set aside during employment. That meant the UK industry didn’t currently have the same scale of capital as Australia, said Graham.
“The hallmarks of our legal and tax systems are such that it’s an obvious place for a super fund looking to diversify away from Australia to put capital to work,” said Graham.
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