Nest has committed approximately £450m (€530m) to seed an infrastructure debt fund with strategic partner IFM Investors, targeting investment opportunities in the European market.

This is Nest’s first investment in an IFM fund since it acquired a 10 per cent shareholder in the group earlier this year, becoming the first international owner.

The partnership between Nest and IFM, which saw both companies commit to co-creating investment strategies with a keen focus on private market opportunities across the UK and Europe, was finalised this month.

The launch of this debt fund is designed to further amplify investments into private markets, including assets in the UK such as UK fibre, wind, waste to energy, bus, or rail infrastructure.

It also aims to deliver attractive relative value in sub-investment grade infrastructure, to enhance risk-adjusted returns for Nest’s members.

Additionally, the move is expected to support IFM’s global expansion into new investment opportunities and markets, while simultaneously supporting Nest’s goal to diversify and increase its allocation to private markets from 17 per cent to 30 per cent of assets under management (AUM) by 2030.

Nest has set out its intention to invest £5bn in private markets through IFM by 2030, and this investment, the first investment in the partnership, is intended to support this ambition.

This commitment is aligned with Nest’s signing of the Mansion House Accord earlier this month, which saw 17 of the largest UK workplace pension providers express their intention to invest at least 10 per cent of their defined contribution (DC) default funds in private markets by 2030, with 5 per cent of the total allocated to the UK.

Pensions Minister, Torsten Bell, said he welcomes the steps Nest and the wider pensions industry are taking to invest in more productive assets, from growing companies to infrastructure.

Bell said these investments “demonstrate the real appetite” behind pension funds signing up to the Mansion House Accord and the positive outlook on the UK private markets.

“Working together, government and industry will deliver the investment to drive future prosperity, supporting better outcomes for savers and faster growth for Britain,” he added.

Commenting on the investment, Nest chief investment officer, Liz Fernando, said: “Our members’ interests are at the heart of Nest’s investment strategy.

“Seeding this global infrastructure debt fund provides our members with access to diversified, world-class investment opportunities, and investments back in their communities and the infrastructure they use.”

She acknowledged the “importance of investing in the UK” and said this was why Nest had signed up to initiatives like the Mansion House Accord.

“This new IFM fund further shows our commitment to supporting the UK economy and gives a significant boost to our ambition to almost double our AUM into private markets to 30 per cent by 2030,” she continued.

“We’re pleased to have taken this exciting first step with IFM. We came together to develop sophisticated investment strategies like this one, and we look forward to co-creating more opportunities on behalf of our members.” 

Adding to this, IFM Investors head of debt investments in Europe, the Middle East, and Africa said IFM Investors was “proud” to support Nest in unlocking the income and risk-adjusted return potential of infrastructure debt for its members.

“Investing in infrastructure is critical to powering the digital economy, cutting carbon emissions, and driving the energy transition,” he said.

“Private debt capital is a key enabler - offering strong relative value for investors and, most importantly, their members.

“IFM exists to invest, protect, and grow the long-term retirement savings of working people.

“By partnering with organisations like Nest, IFM is working to deliver better retirement incomes for workers across the UK.”

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