Legal & General Investment Management (“LGIM”), on behalf of Legal & General Retirement (“LGR”) and the Pension Protection Fund (“PPF”), today announced a long term debt investment of £400 million in DP World’s London Gateway Port, forming part of a £580 million secured financing transaction.
24 Mar 2016
Legal & General Investment Management ("LGIM"), on behalf of Legal & General Retirement ("LGR") and the Pension Protection Fund ("PPF"), today announced a long term debt investment of £400 million in DP World’s London Gateway Port, forming part of a £580 million secured financing transaction.
Legal & General has invested £7 billion in UK infrastructure, direct investments and urban regeneration projects, and aims to invest £15 billion. We are using long-term capital to invest in the ‘new’, providing income for pension funds and stimulating UK economic growth.
Kerrigan Procter, Managing Director of LGR, said: "The investment in the port is a win for the UK infrastructure, UK growth, and UK pensions. Funding the port with long-term capital will help UK businesses grow by increasing global trade; in return pension funds will derive an income to pay their pensioners."
LGR and PPF have invested £250 million and £150 million respectively, in senior debt for the project over a 30 year loan term, managed by LGIM Real Assets. Two additional investors provided a further £180 million of debt. The money will part refinance the existing project finance loan, and help to finance the port’s third berth, thereby significantly extending its current capacity. The loan was arranged by Citi, on behalf of London Gateway’s owner and developer, DP World, the fourth largest global port operator.
Barry Kenneth, Chief Investment Officer at the Pension Protection Fund commented: "Infrastructure investment is a key part of our investment approach. We want to invest in assets that give us long term stable cash flows to ensure that we are able to meet our long term obligations to our members. By partnering with L&G in this opportunity we can benefit from the scale of our combined balance sheets to support delivery of key UK infrastructure."
Sarah Wall, Portfolio Manager at the Pension Protection Fund added: "The PPF continues to build out its exposure to alternative hedging strategies. These provide diversification benefits, as well as an attractive risk adjusted return to benefit our members and levy payers. We look forward to working with L&G and others to be involved in future opportunities as exciting as London Gateway."
The UK’s first new port in over two decades, London Gateway, situated on the Thames estuary at Stanford-le-Hope, Essex, is set to add 3.5 million container TEUs (twenty-foot equivalent units) to Britain’s port providing a natural hub for international trade. Since the start of construction, London Gateway has already created thousands of jobs in London and the South East and is helping London to regain its premier position as one of the world’s largest ports.
Silja Turville, Head of LGIM Infrastructure, commented: "Backed by a strong sponsor, this deal offers an attractive risk adjusted fixed rate financing opportunity. Yet again it represents our ability to bring together our external and internal sources of capital to invest in large-scale infrastructure transactions that are economically crucial and require long term finance."
Situated on the doorstep of London, with unrivalled deep-water access, and road and rail links to the whole of the UK, London Gateway is a state-of-the-art, highly automated deep-sea container port. Uniquely combined with Europe’s largest logistics park, it is able to meet long term demand brought about by the growth in ship sizes while significantly improving UK logistics chain inefficiencies. Enabling shippers from across the UK to make substantial savings, reducing delivery times, haulage costs and fuel consumption, it will also have a significant impact on the UK’s road congestion and carbon emissions, with an estimated future saving of more than 65 million HGV road miles and 148,000 tonnes of CO2 every year.
LGIM Infrastructure forms part of the Real Assets division of Legal & General Investment Management (LGIM), which also includes its real estate business, Legal & General Property (LGP) and its real estate lending arm, Commercial Lending Limited (CLL).
One of Europe’s largest institutional asset managers and a major global investor, LGIM manages approximately £746.1bn in assets on behalf of over 3,100 clients and provides products and solutions spanning all asset classes.
The Infrastructure division has concluded 18 investment deals to date, totaling £1.4bn. Active in all key infrastructure sectors, it has already invested in transport, renewable energy, communication networks and PPP and PFI schemes.
The Pension Protection Fund protects millions of people throughout the United Kingdom who belong to defined benefit pension schemes. If their employers go bust, and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions. Tens of thousands of people now receive compensation from the PPF and hundreds of thousands more will do so in the future. The PPF is a public corporation, set up by the Pensions Act 2004, and is run by an independent Board.
This announcement may contain certain forward-looking statements relating to Legal & General, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature, forward-looking statements involve uncertainty because they relate to future events and circumstances which are beyond Legal & General’s control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General’s actual future condition, performance and results may differ materially from the plans, goals and expectations set out in these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make.
Notes to editors
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.4 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2021
Legal & General Retirement Institutional (LGRI) works with trustees and sponsoring companies of defined benefit (DB) pension schemes of all sizes to settle their pension obligations and secure scheme members’ benefits, through a full range of buy-ins, buyouts and other de-risking solutions.
Our UK Retirement annuity book stands at over £89 billion as at 9 March 2022, of which over £28 billion is invested in direct investments that deliver positive social and environmental impacts, such as clean energy and affordable housing.
Our Client Services’ 12-month rolling Net Promoter Score (NPS) is above +70, which is widely regarded as being at a “world class” level.
(As of 31 Dec 2021)