Six money managers and insurers have announced about £9 billion ($14.1 billion) of commitments to U.K. infrastructure and other private placements in the U.K. following a change in tax treatment.
The firms are Allianz Global Investors, Aviva, Friends Life, Legal & General, Prudential and Standard Life. The Investment Management Association announced the commitments in a news release Thursday.
The commitments were revealed following an announcement made Wednesday by George Osborne, the U.K. chancellor of the exchequer, of a new exemption from withholding tax on interest from certain private placements. Mr. Osborne made the announcement in his Autumn Statement, an annual update on the government's plans for the economy.
“This is great news,” said Mr. Osborne in the IMA release. “Our long-term economic plan is all about attracting investment to the U.K., getting credit to businesses and helping them grow. Today, all three get a boost. This also signals the potential beginnings of an enduring private placement market for the first time in the U.K.”
Allianz GI plans to invest more than £3 billion in U.K. infrastructure debt over the next three to five years. Elizabeth Corley, CEO of Allianz GI, said in the statement the investment was in addition to Allianz GI's existing £600 million pipeline of U.K. infrastructure debt allocations, due to be invested by the end of this year.
“The government's decision is good news for everyone who is passionate about U.K. infrastructure, for those who are committed investors in the asset class and ultimately to everyone in the U.K. who uses infrastructure,” said Deborah Zurkow, chief investment officer for infrastructure debt at Allianz GI, in the statement.
Aviva said in a separate statement it is making an immediate allocation of £500 million to invest in U.K. infrastructure projects, in addition to the £500 million already allocated in 2013.
Spokesmen for L&G and Prudential said there were no further details at this stage. A spokesman for Friends Life said the insurer has already committed £1 billion to private placements, including £500 million of commercial real estate loans and £500 million of other private placements, which have not yet been allocated. A spokesman for Standard Life could not be reached for comment by press time.