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Twenty pension funds sign up to government initiative

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Ministers want more domestic backing for infrastructure

and

companies

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Investors including L&G pledge $3.5 billion to UK assets

By Iain Withers

LONDON, Oct 20 (Reuters) - The British government

launched on Monday a club of 20 of the country's largest pension

funds to try to drum up coordinated backing for local

infrastructure, as major pension funds pledged 2.6 billion

pounds ($3.5 billion) to UK assets.

The 'Sterling 20' initiative includes money managers Legal &

General ( LGGNF ), Aviva and M&G, as well as

Britain's biggest private pension scheme, the Universities

Superannuation Scheme.

Britain has pursued a range of reforms to stimulate private

investment and speed up economic growth, although the total of

the various investments announced on Monday was lower than past

rounds.

'GETTING BRITAIN BUILDING AGAIN'

L&G said it would invest 2 billion pounds ($2.7 billion) in

UK "impact" projects over five years, including developing

10,000 affordable homes and funding regeneration schemes, as

part of coordinated announcements.

Austalia's largest pension fund, AustralianSuper, also

announced it would invest 500 million pounds in UK rental homes,

which has been a booming sector in Europe.

While the government has launched various initiatives to boost

private investment, some finance firms have privately questioned

their effectiveness and the scarcity of so-called shovel-ready

projects. Finance minister Rachel Reeves' budget next month

could also test business confidence as she considers tax rises.

"This is about getting Britain building again - bringing our

savings, our investors and our regions together to deliver the

homes, infrastructure and industries that will drive growth and

create good jobs in every corner of the country," Reeves said in

a statement.

Sterling 20 members will work with the government and the City

of London Corporation to channel pension savings into British

infrastructure and high-growth firms such as in the artificial

intelligence sector, the government said, without providing

further details.

"(L&G's) commitment will help unlock the investment needed

in productive assets across the country - creating jobs,

strengthening communities, and driving both regional and

national growth," L&G CEO Antonio Simoes said.

Pension fund Nest also said it would invest about 100

million pounds in UK assets through its money manager Schroders

Capital, part of a wider 500-million-pound extension of

its private equity investment mandate.

Eleven pension providers have signed up to a separate pact

to invest 5% of their funds in UK private assets. They currently

only invest 0.6%, the Association of British Insurers said this

week.

Sterling 20 will be formally launched at the government's

Regional Investment Summit in Birmingham on Tuesday, which will

be attended by a range of investors including Australia's

largest pension funds.

($1 = 0.7451 pounds)

(Reporting by Iain Withers;

Editing by Mark Potter and Emelia Sithole-Matarise)