Legal & General pulls trigger on £1.5bn investment


The £160 million deal, which launches Nigel Wilson’s plan and also would involve the construction of the first section of the east Leeds orbital road, could be announced as early as today. The development is forecast to create 13,000 jobs, according to The Times.

As part of the deal, L&G would acquire a 50 per cent stake in Thorpe Park, a 200-acre, mixed-use business development site in east Leeds, and would enter into a joint venture with Scarborough Group to deliver phase two of the development. L&G has committed to provide the finance required to develop it over a phased five-year period.

With consent for a 1.35 million sq ft mixed-use office and residential scheme, Scarborough Group received planning consent this year for the first 60,000 sq ft of offices and consent for 300 new homes on the site. The L&G investment is expected to speed up the development.

The deal would be the latest success for the government’s Regeneration Investment Organisation, which has helped to facilitate the joint venture negotiations. The agency, which was set up by the prime minister in 2013, was established to help international investors to identify and fund regeneration opportunities in the UK. It has worked on the redevelopment of Battersea Power Station and the Chinese investment in Manchester airport.

At the start of the year, L&G committed to co-invest £1.5 billion into RIO projects alongside capital from other institutions and leading overseas investors. The fund manager, which manages more than £700 billion of investments, is working with UKTI, the government’s inward investment body, to attract an additional £15 billion of investment. L&G is expected to bring in one of RIO’s international investment partners to work alongside on the Leeds scheme.

“The UK is a terrific place to invest. We are well-positioned to work alongside UK and international money to channel funds into regeneration that delivers growth, homes and jobs,” Mr Wilson said at the Downing Street launch of the fund in January.

In recent years L&G has increased its exposure to the property sector with a portfolio of UK regeneration projects, including schemes in Bracknell, Salford, Canning Town in east London, Plymouth, Wakefield and Liverpool.

The fund manager invested in Media CityUK alongside Peel, a £503 million strategic regeneration project in Salford covering about 35 acres.

Mr Wilson has been a passionate advocate of the need for institutional fund managers to invest in infrastructure projects. In an interview with The Times last November, he argued that the “slow” investment money of pension funds and insurers could be used to help to rebuild the nation’s crumbling roads, hospitals and schools.

“We need more slow money to come forward,” he said, in reference to the lengthy investment periods for companies such as L&G, which can run to decades to match returns better with the long-term nature of insurance and pension liabilities.

“We live in a capitalist society; part of that is long-term financing, using markets to provide and raise equity and debt,” he said. “We often forget that, being driven by short-term earnings-per-share targets and having to please shareholders with returns every couple of months. Doing it that way would never have got the M25 built. The world is awash with a lot of people with slow money, but they are not making their voices heard.”