Feb 24, 2021

Investors look to Sunak for clarity on new UK infrastructure bank

Ever since chancellor Rishi Sunak announced the setting up of a UK government infrastructure bank last autumn, investors have wondered what its role will be. "Given there is at least $200bn of international capital looking for projects in which they can invest, the government has to be careful it doesn't just crowd out existing finance," said Lawrence Slade, chief executive of the Global infrastructure Investor Association, which represents private sector investors. He argued the new bank, which will take over the government's guarantee scheme, should only take on projects that are "Too risky" for institutional investors, pointing out that the Canada Infrastructure Bank was mandated to lose up to C$15bn over 10 years. "It's not yet clear what question the new infrastructure bank is trying to answer," he said. While investors will put equity into existing or smaller infrastructure projects - such as an airport extension or a wind farm - they are wary of new projects, according to Richard Abadie, head of infrastructure at consultancy PwC, because the latter carry long term construction risks and do not provide an income stream for several years.

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