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One of Canada’s largest asset managers plans to more than double its headcount in London and invest billions in the UK, hailing the city as more of a gateway to the world than New York.
The Alberta Investment Management Company’s vote of confidence in the UK capital defies the prevailing gloom over the country’s international attractiveness post-Brexit amid concerns that London’s position as a pre-eminent financial centre for international capital is at risk.
AIMCo, which manages $120bn on behalf of Alberta’s wealth fund and pension funds, told the Financial Times it planned to increase its London headcount from 30 to 80 over the next few years and invest “billions” in the UK, including on projects linked to the country’s “green industrial revolution” policy.
“Being in London is a much more significant step towards Asia than New York would be,” said chief executive Evan Siddall. “It’s a much more significant step towards eastern Europe than New York. It’s a much more significant step towards Africa than New York would be.”
One of the Maple Eight Canadian pension fund managers that collectively manage about C$2tn ($1.5tn) in assets, AIMCo has in recent years significantly increased its overseas exposure, with the proportion of its portfolio invested in Canada falling from 80 per cent to 45 per cent since 2013.
“I think there was a certain ‘we’re Albertan and we’re going to stay here’ pride. I’d call it a little parochial,” said Siddall, who became AIMCo’s chief executive in 2021.
The company’s UK plans follow similar moves by other large global investors including $102bn Australian superannuation fund Aware Super, which is opening its first London headquarters later this year.
AIMCo’s move to boost its British presence comes as UK pension funds face growing pressure to step up their domestic investment.
A recent report by the Tony Blair Institute, a think-tank set up by the former UK prime minister, found that overseas pensions invested 16 times more than domestic pensions in British venture capital and private equity, despite the UK having one of the world’s biggest pension markets.
The report suggested the UK incentivise consolidation among its pension funds in order to benefit from economies of scale, similar to the Canadian model.
Siddall said that even after Brexit London remained one of the world’s two principal financial centres.
“Long-term capital should be in London,” he said, adding that the city was “also a more cosmopolitan place” than New York. “And the pound sterling is still one of the world’s reserve currencies, which is an incredible asset for the UK that I think some people take for granted.”
The fund already has investments in the UK. It is part of the consortium that owns London City airport and has invested in the redevelopment of the BBC offices in White City and in logistics centres across the country.
While the UK government is not doing much to shore up the attractiveness of the capital, according to Siddall, its investments in the green transition provide an opportunity for “long-term patient capital”.
“We’ve been spending the last year and a half looking at transition finance opportunities as a long-term capital provider. There’s money to be made off of climate transition for sure.”
The UK plans are part of a big international push by AIMCo, which said it wanted to invest C$3bn-C$5bn outside of Canada in the next year. It also plans to open an office in Singapore this year and is aiming at further investments in Asia, where Siddall admits AIMCo is “way underweight”.
However, the fund will continue to avoid investing in mainland China — echoing the caution of other Canadian funds that are reducing or reassessing their exposure to the country. “We have a watching brief on China,” said Siddall, citing “currency risk, political risk, rule of law”.
On the question of whether governments can or should compel pension funds to support political priorities, as has been suggested in the UK, Siddall said: “We get the same pressure in Canada. Our obligation is to maximise returns for our beneficiaries.
“We’re going [to] invest in the world to do that. Why would we confine ourselves to one particular geography? Because the broader we invest, the more opportunity we have.”
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