Railpen plans to expand its infrastructure portfolio from £1bn to up to £3bn over the next few years. The £35bn scheme’s head of infrastructure Lewis Vanstone outlines why, and explains how such investments can support members and the UK economy.
The UK is entering an ambitious period for infrastructure investment. Whether it is strengthening energy security, expanding digital capacity, or modernising transport and utilities, the scale of infrastructure needed over the next decade is vast.
Institutional investors, particularly pension schemes with a long-term investment horizon, are uniquely placed to finance that transformation.
At Railpen, our purpose is clear: secure the future of our 350,000 members. Increasingly, the investments that serve our members best are the same investments that support the UK’s economic growth and resilience. Infrastructure sits at the heart of that alignment. It has become one of our key long-term growth drivers and is a core part of our strategy for the years ahead.
An expanded, stronger infrastructure strategy
Infrastructure has long been a part of Railpen’s portfolio, but investment opportunities have grown sharply in recent years. We are expanding our strategy to reflect that shift by increasing our target infrastructure allocation, strengthening our specialist capabilities, and diversifying our investable universe.
“We aim to invest in sectors where Railpen can add value as an engaged, hands-on owner, drawing on our existing expertise across real assets.”
Lewis Vanstone, Railpen
Our approach prioritises assets that can provide strong risk-adjusted returns and overall resilience from a total portfolio perspective. These might be assets that deliver predictable, inflation-linked cash flows and a low correlation with economic growth over multi-decade horizons, but we are also happy to take on development or technology risk where explicit inflation-linked cash flows are not present.
Alongside this, we prioritise high barriers to entry such as natural monopolies, consents/licences, long-term contracts, strategic locations and high capex, among other factors. At the same time, we aim to invest in sectors where Railpen can add value as an engaged, hands-on owner, drawing on our existing expertise across real assets.
This is not expansion for its own sake. It is targeted, disciplined and, as with everything we do, member first. It means infrastructure will play a larger role in Railpen’s portfolio over the coming years as we grow from a £1bn infrastructure book to approximately £1.5bn by the end of the year, rising to £2bn to £3bn over the next five years. Around 75% of this will be invested in the UK.
A moment of alignment
The timing could not be more significant. The government has made infrastructure a central pillar of its economic growth agenda.
For pension schemes, alignment between public policy and member interest creates a compelling investment environment. High-quality infrastructure can generate strong, reliable returns, and at the same time, it supports jobs, local economic regeneration and national strategic capability.
“By expanding our infrastructure strategy, we aim to deliver lasting value for our members, while supporting the UK’s economic renewal.”
Lewis Vanstone, Railpen
This dual benefit, financial and societal, is important to Railpen’s belief in ensuring that the world our members retire into is the best it can be.
However, a partnership must be built on the right foundations. Clear policy signals, stable regulation, and efficient planning processes remain crucial. So far, some of these have been lacking, with investors unable to deliver because essential enabling infrastructure or planning policy has fallen short. Institutional capital will flow most effectively when these barriers to investment are removed.
Remaining disciplined while expanding our reach
Railpen’s infrastructure portfolio to date has focused on social infrastructure such as schools and hospitals, renewable energy, storage, and waste. While these will continue to be important sectors for us, our larger fund size and a focus on resilience mean that our strategy is to diversify into a wider range of industries.
Areas of interest include:
- Transport
- Telecoms
- Equipment leasing
- Independent networks
- Data centres
Infrastructure can be a powerful contributor to long-term returns, but only with the right discipline. Not all projects are equal, and not all sectors offer the infrastructure characteristics suitable for pension portfolios.
Disciplined decision-making, during both due diligence and execution of our asset management plans, ensures that our portfolio not only supports the UK economy but also delivers the risk-adjusted returns our members rely on.
A once-in-a-generation opportunity
The UK stands at a pivotal moment. Delivering the infrastructure needed for a modern, competitive, decarbonised economy will require long-term capital on an unprecedented scale. Pension schemes are uniquely positioned to play a central role.
Railpen is ready to seize that opportunity. By expanding our infrastructure strategy, focusing on high-quality assets, and exploring the next generation of infrastructure projects, we aim to deliver lasting value for our members, while supporting the UK’s economic renewal.
Lewis Vanstone is head of infrastructure at Railpen.
