Super funds sharpen sights on UK amid scale ambitions

As Australian funds increasingly look overseas for new ways to put Australians’ money to work, several large investors such as $300 billion AustralianSuper and $160 billion Aware Super have turned their sights to the UK, solidifying their presence with onshore offices and billions in capital deployments.

The funds were among seven institutional investors – alongside HESTA, Australian Retirement Trust, Lendlease, IFM Investors, and Macquarie Group – to join UK Foreign Secretary David Cameron in a recent meeting in Canberra to discuss future opportunities for trade and growth.

“It was encouraging to hear positive feedback from Australian investors about their experiences with the UK government’s concierge-style investor support, and their recognition of the UK as the premier location for operations covering both Europe and the United States,” said Louise Cantillon, British consul general for NSW and deputy trade commissioner, in a statement to Super Review.

“We are proud to be at the forefront of tackling climate change as the first major economy to commit into law to Net Zero by 2050. Investors are very interested in the opportunities presented by the UK’s Net Zero commitments and the resulting energy transition.”

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According to Cantillon, the discussion in Canberra also turned to the impact of ESG and the need for sustained investment to combat an increasingly contested international environment.

Following the meeting, Aware Super chief executive Deanne Stewart told Super Review the $170 billion fund was “honoured” to extend a warm welcome to the Secretary of State as a further signal to its ongoing commitment to the UK.

In November last year, it had selected the UK for its first overseas base, initially eyeing lucrative opportunities in property, infrastructure, and private equity through the on-ground presence in London.

At the time, Aware Super highlighted that Australia’s superannuation system as a whole totals $3.5 trillion or around 150 per cent of the Australian stock market, driving it towards global diversification.

“We based our decision to open our first international office in the UK and commit $10 billion to the UK and Europe on one fundamental fact: it is going to benefit our 1.1 million members,” Stewart said.

“We have a rapid growth trajectory predicted in the next few years, and believe the UK is a key platform from which we can further fuel our scale ambitions and diversify our portfolio […]

“Our international expansion strategy is designed to position us to operate across the largest and most attractive capital markets, to find the strongest investment opportunities and deliver strong longer-term returns and competitive fees for our members back in Australia.”

Also speaking to Super Review, HESTA CEO Debby Blakey said it was “fantastic” to meet with the former UK prime minister, institutional investors, and fellow superannuation fund representatives in the exclusive briefing.

“As a large global investor, we’re constantly seeking new, innovative investment opportunities with the appropriate risk-return profile so we can continue delivering strong long-term performance for members, while creating positive outcomes,” she said.

“We continue to see opportunities in developed markets like the UK. Our investments include private equity investments, infrastructure, and property investments that provide strong long-term income streams for members.”

Under the UK-Australia free trade agreement, which came into force on 31 May 2023, comprehensive provisions on investments have increased the appeal of the UK as an investment destination.

Earlier this month, Australia’s largest super fund AustralianSuper confirmed it is on track to increase its investment portfolio in the UK to more than £18 billion by the end of the decade, noting large-scale, long-term opportunities across sectors like transport and logistics, digital infrastructure, mixed-use estate, and the energy transition.

The fund, which opened a London office in 2016 and has since grown to more than 100 staff members, has some £8 billion currently invested in the UK.

Paul Schroder, AustralianSuper CEO, said the fund has built “strong partnerships with like-minded industry leaders and capital providers” since establishing its London office.

“These relationships reflect our approach to direct investing and value creation during ownership, where we’re focused on effective stewardship to generate sustainable returns for more than 3.3 million members,” he stated.

“Despite ongoing global economic uncertainty, the UK remains an attractive destination for global investors like AustralianSuper which is evidenced by our forecast £8 billion commitment to the market over the rest of this decade.”