Australian super funds invest billions in transforming the UK energy sector

Australian investment firm IFM plans to invest almost 10 billion British pounds (283 billion crowns) in the United Kingdom’s energy transition over the next four years. IFM, one of the world’s largest pension fund managers, manages approximately 217 billion Australian dollars.

IFM and British Prime Minister Rishi Sunak are expected to sign a memorandum of understanding on Monday at the Global Investment Summit in London, where leading chief executives and investors from around the world will meet. According to IFM, the UK has favourable investment conditions and many significant opportunities to expand the energy transition.

“These opportunities include offshore wind farms, solar power, battery storage, renewable fuels and pumped-storage hydropower,” said Deepa Bharadwaj, IFM’s director for Europe.

IFM is one of the world’s largest pension fund managers and manages approximately 217 billion Australian dollars. It has invested in British infrastructure for almost two decades and owns or holds stakes in a portfolio of UK assets worth 5 billion pounds. These assets include Manchester and Stansted airports, Anglian Water and the M6 toll road.

Pressure on the Australian government

IFM is warning the Australian government that a slow transition to renewable energy is putting Australia at risk of losing “attractive” investments, potentially leaving the country significantly behind in the energy transition.

Large investment funds favour more attractive opportunities in the US, the UK and Europe. Compared with Australia, these countries have strong climate and energy policies and growing demand for clean energy and low-carbon products and services.

In the United States, for example, the so-called Inflation Reduction Act was passed as part of efforts to promote sustainable development and combat climate change. As a result, more than USD 270 billion is to be invested in clean energyover eight years.

Australian funds are therefore calling on the government to draw up a national plan for developing the electricity grid, speed up planning and approval processes, and make domestic investment opportunities more competitive. This would help keep domestic capital in the country.