24 Mar 2016
Legal & General and The Pension Protection Fund invest £400m in London Super Port
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 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.
Head of Group Corporate Communications
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Head of Communications
Capital and LGIM Real Assets
Notes to Editors
Legal & General Group Plc
Established in 1836, Legal & General is a leading provider of insurance, savings and investment management products in the UK. The Group has a market capitalisation of £14.9bn (as at 31st December 2015) and is responsible for investing £746bn worldwide (as at 31st December 2015) on behalf of investors, policyholders and shareholders. Legal & General has over seven million customers in the UK for life assurance, pensions, investments and general insurance plans and over one million customers in the US who rely on us for life assurance. In 2015, Legal & General's operating profit (on the IFRS basis) was £1,455m and adjusted earnings per share were 18.58p for the period, an increase of 14% and 11% respectively.
For more information on Legal & General, please see http://www.legalandgeneralgroup.com/
Legal & General Retirement
Legal & General Retirement has participated in the insurance solution pension de-risking market for nearly 30 years and was voted Risk Reduction Provider of the Year at the 2014 and 2013 UK Pensions Awards and Risk Management Provider of the Year at the Pensions Age Awards 2014. Legal & General was also voted Insurer of the Year at the 2014 Insurance Risk Awards. Legal & General provides annuities to pensioners and has completed a number of landmark transactions. These include the $900m deal with Philips in the US in partnership with the Prudential Insurance Company of America in 2015, the £3bn bulk annuity arrangement with the ICI Pension Fund, the largest bulk annuity policy arranged by a pension scheme in the UK to date, secured in March 2014 and the £3.2bn longevity insurance transaction with the BAE Systems 2000 Pension Plan in February 2013. Legal & General manages £43.1bn of annuity assets as at 30 September 2015.
Legal & General offers a range of de-risking solutions, which includes buyout, buy-in, longevity insurance and liability-driven investment (LDI), to pension schemes of all sizes. Legal & General is also able to tailor a combination of LDI and longevity insurance to provide "DIY buy-in" solutions. Legal & General has expertise in investment management, all aspects of defined benefit provision as well as an in-depth understanding of mortality trends and longevity risk. The excellent services we are able to provide also include payroll, administration and communications services.
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
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.
Forward Looking Statement
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