Aviva Investors is targeting £10bn of investment into UK infrastructure and real estate projects over the next three years.
The global asset management business of Aviva plc said the investments, on behalf of savers and investors, will support job creation, including in renewables, in cities and regions across the UK.
In addition it expects to direct over £3.5bn into UK structured finance and private corporate debt strategies.
Aviva Investors is already a significant investor in infrastructure and real estate via its £47bn real assets business, which targets investment opportunities in both asset classes, as well as private debt and structured finance.
Chief executive of Aviva, Amanda Blanc, said: “Aviva is investing in UK infrastructure and real estate to help our economy and communities bounce back. We plan to invest in the UK’s regions and cities, in critical areas such as social housing, renewable energy and rail networks.
“The investments being made will ultimately fund people’s savings and retirement, aiming to deliver stable returns to our customers and funding a sustainable future for the UK.”
With the UK facing a sizeable funding shortfall in meeting its infrastructure needs, the £10bn of capital will support the development of UK real estate and infrastructure, including renewable energy projects in-line with the government’s long-term commitment to meet net-zero emissions by 2050.
The increase in allocation from institutional investors to real assets comes as interest rates remain low and public markets continue to suffer from heightened volatility and squeezed yields.
This has led to assets under management in Aviva Investors’ Real Assets business growing by nearly 28% to £47.3bn since its launch in May 2018.
Almost £6.5bn of commitments will come from Aviva group companies, with the remaining amount expected to come from external client mandate
Mark Versey, chief investment officer, real assets, at Aviva Investors, said: “Investors are recognising the enhanced yields they can get from holding real assets compared to the return on a comparable publicly listed security.
“Being backed by an asset with a tangible value means that they often carry much lower volatility too.
“The market uncertainty caused by Covid-19 should make the resilience of long-term cashflows offered by real assets increasingly appealing to institutional investors. With interest rates likely to remain lower for longer, we expect clients will continue to look towards the sector for risk diversification and returns.”