London Mayor Boris Johnson's fledgling British sovereign-wealth
fund plans to combine local public pension funds and invest
billions of pounds in private equity and infrastructure
projects.
The plan to develop a so-called citizens' wealth fund with more
than $100 billion is being led by Edmund Truell, a private equity
investor and chairman of the London Pensions Fund Authority.
The mayor on Friday appointed Mr. Truell as his adviser for
pensions and investments, with a mandate to expand partnerships
that he developed between the London-based pension fund and two
funds in northern England.
Mr. Truell said in an interview that he recommends pension funds
sell their government bondholdings and invest as much as half their
money in higher yielding private equity, housing and infrastructure
assets. The goal of the new wealth fund is to save costs, improve
returns and provide funding for construction of U.K.
infrastructure, he said.
"We would have our own homegrown sovereign-wealth fund," Mr.
Truell said. "We want to be a national entity. We don't believe
that managing pensions should be a local affair."
The London Pensions Fund Authority and the Greater Manchester
Pension Fund joined forces in January to create a £ 500 million
($780 million) infrastructure fund. In December, the London fund
agreed a separate £ 10 billion partnership with the Lancashire
County Pension Fund.
British government pension funds are fragmented along
geographical lines and lack the scale of funds such as the Canada
Pension Plan or PGGM in the Netherlands. Both of those funds are
able to directly acquire stakes in large companies and invest in
major infrastructure projects. Mr. Truell said he has asked
executives at funds in Canada and the Netherlands to join an
advisory board.
In July, U.K. Chancellor George Osborne called for pension funds
to make savings or pool their investments. Mr. Truell said that the
national policy provided support for his initiative.
Mr. Johnson's term as London mayor ends in 2016. He was elected
a member of parliament earlier this year. Mr. Truell said he
expected the project to build a sovereign-wealth fund to continue
regardless of who succeeds Mr. Johnson as mayor of the U.K.
capital. "I believe any London mayor will face the same challenges
Boris faces," he said. "London itself needs a vast amount of spend
on its infrastructure."
Write to Simon Clark at simon.clark@wsj.com
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