Legal & General has long sought to carve out a different reputation for itself, that it’s less a “dull, risk-averse institution” and more an imaginative supplier of “patient capital”. This week it took a leap forward in delivering on its ambition.
The UK has an infrastructure problem. It has an imbalanced economy. And it needs investment in its transport and social infrastructure, especially beyond London. The government announced the first-round winners of the six-year, £12bn regional growth fund on Monday. That will go some way to addressing these long-standing problems. More significantly, cities minister Greg Clark, the architect of the scheme, said private money was already flowing on the back of this state pump-priming via the 39 local enterprise partnerships.
L&G is leading the charge on that front. At a meeting with Lord Heseltine and Clark last week, chief executive Nigel Wilson agreed to appoint a LEP co-ordinator and to write to the 39 LEPs to ask them to help it spot investment opportunities in their regions. As an approach, it’s not dissimilar to the one deployed by Clark himself in identifying which LEP schemes to back with public sector investment.
L&G isn’t the only private sector investor to respond to Whitehall’s lead, but its response is the most comprehensive.
But if one can be persuaded to do so at scale, why not other institutions – sorry, other suppliers of patient capital? And why not overseas investors too? Already Beijing Construction Group is investing in Manchester airport and Hong Kong’s Cheung Kong in UK utilities. It wouldn’t take a massive leap of imagination to see overseas investors help fund other forms of infrastructure development as well.
If it’s a significant move by L&G, it’s a step change for government. Now it matters less where the investment comes from, as long as it comes.
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¦ What a mess Smithfield Market has become. This week communities secretary Eric Pickles rejected TIAA Henderson Real Estate’s plans for a £160m redevelopment of the historic market in the City of London, the second time a government has rejected a scheme there. With the developer winning the support of English Heritage, Design Council CABE, the City of London Corporation (which owns the freehold), the mayor of London and the Smithfield Market Tenants’ Association, approval had looked likely.
Nevertheless Pickles said the plan would have “an extremely harmful effect” on the historic buildings and criticised the City of London’s “deliberate neglect”. Ouch.
So what now? Henderson might want to walk away but can it realise full value from the asset when redevelopment has proven so difficult? Will it have the appetite to work up new plans, when this latest effort will have cost it a seven-figure sum?
Will the government seek to intervene and spur action? Or will the Cathedral Group-backed alternative gain momentum? After all, it would need the support of the City and Henderson to make headway. For now, a lengthy stand-off and inaction appears most likely.
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damian.wild@estatesgazette.com
