The investment marks Nest’s first capital deployment with IFM since it bought a 10% stake in the Australian asset manager in February. The partnership was finalised earlier this month.

“We came together to develop sophisticated investment strategies like this one, and we look forward to co-creating more opportunities on behalf of our members.”

Liz Fernando, Nest

While the strategy is focused on Europe, the master trust has made clear its intention to put a significant amount of money to work in the UK. The infrastructure debt fund will allocate to assets such as fibre optic broadband connections, wind power, and transport infrastructure, including in the UK.

Liz Fernando, Nest’s chief investment officer, said seeding the new fund “provides our members with access to diversified, world-class investment opportunities, and investments back in their communities and the infrastructure they use”.

“We know the importance of investing in the UK, and that’s why we have signed up to initiatives like the Mansion House Accord,” Fernando said.

“We’re pleased to have taken this exciting first step with IFM, one of the world’s leading global infrastructure investment managers,” the CIO added. “We came together to develop sophisticated investment strategies like this one, and we look forward to co-creating more opportunities on behalf of our members.”

Announcing the partnership with IFM earlier this year, Nest indicated that it was interested in exploring several new strategies, including infrastructure debt and equity and potentially infrastructure technology.

Nest plans to increase its allocation to private markets to 30% by 2030, from 17% currently. IFM will be a primary recipient of this allocation, with the master trust planning to invest £5bn through the asset manager by the end of this decade.

Torsten Bell, the pensions minister, said Nest’s move “demonstrates the real appetite behind pension funds signing up to the Mansion House Accord and the positive outlook on the UK private markets”.

“Working together, government and industry will deliver the investment to drive future prosperity, supporting better outcomes for savers and faster growth for Britain,” Bell added.

IFM is expected to complete due diligence on the fund’s first assets and begin deploying capital over the next few months.

David Cooper, head of debt investments in Europe, the Middle East and Africa at IFM Investors, said: “Investing in infrastructure is critical to powering the digital economy, cutting carbon emissions, and driving the energy transition. Private debt capital is a key enabler, offering strong relative value for investors and, most importantly, their members.”