Mega funds keen to build Scotlands future

Peter Jones Times

Last updated December 7 2011 12:01AM
http://www.thetimes.co.uk/tto/news/uk/scotland/article3250490.ece

The prospect of a high-speed rail link between Glasgow and London has increased significantly after foreign pension and sovereign wealth funds, as far afield as Canada and Singapore, expressed interest in investing in Scottish infrastructure projects.

Glasgow entrepreneur John McGlynn, who has built up a multi-million business in car parks, business parks and self-storage, told the Times yesterday that overseas pension funds are interested in the Scottish end of the line.

They are interested in projects which have a good securitisable ticket revenue stream and where they can see long-term sales, he said. They have no problems about investing in Europe, the UK and in Scotland.

The giant Strathclyde pension fund, which looks after £10.5 billion of the former Strathclyde Regional Council workers pensions, is also considering investing in new housing projects.

The overseas pension fund interest would, if realised, be a first in Scotland. It comes as Alex Neil, secretary for infrastructure, announced a £60 billion public investment plan for the next 20 years.

The programme is dominated by transport spending, including the complete dualling of the A9 between Perth and Inverness, and a start to dualling the A96 between Inverness and Aberdeen at a total cost of between £1.75 billion to £3.5 billion.

It also incorporates the Edinburgh- Glasgow rail line electrification (£1.1 billion) and upgrades to much of the Scottish rail network including the Stirling-Aberdeen-Inverness triangle (between £750 million and £1.7 billion).

But in addition is an estimate of between £1.3 billion and £3 billion to be spent eventually on the Glasgow terminals of the Scotland-London high-speed rail line that the UK Government hopes to start building between London and Birmingham later this decade.

This prestigious and costly project the London-Birmingham section is estimated as likely to cost more than £30 billion is one that the UK Treasury is keen to attract overseas investors.

Mr McGlynns contacts with overseas pension and sovereign wealth funds have come about because he has spent the last year raising money for a £100 million private equity fund aimed at investing in Scottish assets, which he plans to launch early next year.

I attended a course on private equity and venture capital at Harvard and many of my colleagues on that course are now the chief executives of pension funds, he said.

He said he had found considerable interest in investment possibilities in Scotland amongst the people he had spoken to in Canada and Singapore.

I am very encouraged by what I have heard and what the Scottish government is doing. If it doesnt happen, it wont be for the want of trying, he said.

Though Mr McGlynn is a Conservative party donor, he was full of praise for Mr Neils announcement.

Mr Neil was yesterday upbeat about the chances of beating the UK Treasury in the race to secure foreign investment in infrastructure. We are streets ahead, he said. He has had preliminary discussions with Paul Rooney, treasurer of Glasgow City Council, and who also chairs the Strathclyde Pension Fund about the possibility of investing in infrastructure, particularly housing in Glasgow.

A spokesman for Strathclyde Pension Fund said last night: We have yet to see any detail. However ... we will be meeting with the Scottish government next week to talk about this and other proposals.

The spending plans cover nationally important projects that cost more than £20 million, set out in four phases and covering 54 road and rail infrastructure projects and 33 programmes for housing, health, education, and justice.

By the end of this parliamentary session in 2016, the government will be committed to completing the Glasgow-Edinburgh M8 missing link between Baillieston and Newhouse, the Borders rail link, the completion of the capitals tram line and a new prison, HMP Grampian.

Work on the Aberdeen bypass will get under way if legal obstacles are removed, while work will start on the A9 dualling between Luncarty and Birnam, with completion of the whole length not due until 2025.

Mr Neil pledged that high-speed broadband services will be available to everyone in Scotland by 2020.