Being a Disruptor is a Privilege and a Responsibility Being an infrastructure disruptor is a privilege and a responsibility FTTCS Infrastructure Summit, Europe Conference 2015 Dr Nigel Wilson DrChief Nigel Executive Wilson Officer NovemberOctober 20152015 ChiefLegal &Executive General Group Officer Legal & General Group

LEGAL & GENERAL GROUP PLC LEGAL & GENERAL GROUP PLC 2 After 30 years of failure, now is the time to deliver

Vital for growth in Output, Productivity and Real Wages.

Devolution has raised political ambition: our towns and cities are not overbuilt but under-demolished: this is generationally unfair.

Shifting Public Attitudes: from NIMBY to PIMBY – the UK is a great place to invest.

Abundant long-term institutional money, new assets needed, traded asset prices high post-QE.

Technology enables efficient low-cost infrastructure in housing, transport, energy, healthcare.

Historically we have outsourced infrastructure investment to Asia and technology investment to the US: time to reverse the trend

LEGAL & GENERAL GROUP PLC 3 Agent–Principal Combination Opens Doors

Principal Investor Enhancing yield by deploying surplus capital

Project Delivery

Agent Direct Investor Asset Management for Creating matching Assets third party partners adds for long-dated liabilities expertise

Partners have comfort through shared economic exposure LEGAL & GENERAL GROUP PLC 4 Legal & General as a Direct Investor

Transport and Logistics: £320m, Aberdeen international business park: maturities to 30 years £127m investment, 335,000sq ft office space

£15bn Places for people: £252m, acquiring 4,000 homes, building 7,000 houses, 50 year lease

Media City, Quays: £503m investment . 50% ownership CALA Homes: £210m investment (47% stake), further PRS Investment – 100s of new homes We continue to drive risk- £200m for Banner Homes Royal Liverpool University Hospital: £162m regeneration project: 200 acre mixed use £429m rebuild adjusted returns upwards site with potential for 7,000 through direct investments in homes £200m Bracknell regeneration partnership long dated real assets where with Schroders English Cities Fund the banks have left behind schemes in Liverpool, Hyde Housing Group: Plymouth, Canning Town, £102m investment ‘white space’. Investment in Salford and Wakefield: 15 year facility over 5.4m sq ft of mixed-use housing and regeneration are space, brownfield land Sentinel Housing: private placement economically useful for us, for £400m Cardiff city centre (registered social redevelopment joint venture housing provider the broader economy and in Hampshire) socially useful too.” Methodist Care Homes: £70m investment, 30 year lease Thames Valley Housing: £40m, 25 year facility enabling University of Southampton: 500 affordable homes £93m, 1,104 beds, 40 years income

LEGAL & GENERAL GROUP PLC 5 Investment is required to deliver growth

(1) DM economies have over-consumed and under-invested – EM economies have under-consumed and over-invested

The tsunami of digital money is moving around the world’s asset markets, bidding up the price (2) of existing assets, then rapidly exiting, causing volatility to increase and returns to fall

(3) Public and private investment is too low – we need a change in policy and approach

(4) “Fed Watching” by the market is being replaced by “Market Watching” by the Fed

(5) Moore’s Law is relentless

LEGAL & GENERAL GROUP PLC 6 We Support the Commission’s Approach to Financial Services and the EU Growth Agenda

• Lord Hill’s ambitious Agenda • Infrastructure (Physical and Digital) is at its heart

• Long-term investors will be key: •

1. Access to Equity eg Prospectus

• Directive “We want to support institutional 2. Deepen and improve access to investors to invest in long-term debt capital markets eg projects… for instance, securitisation, private Placements insurance companies were given 3. Infrastructure Financing eg early a number of incentives to invest changes to S2 Standard Formula for the long term in the detailed 4. Consistency across the EU rules introduced for Solvency II “canon” eg ELTIFs, S2, IORPs last October.” Lord Hill, April 2015

LEGAL & GENERAL GROUP PLC 7 Devolution raises political ambition to build Digital Cities

“Our Towns and Cities aren’t overbuilt, they’re under-demolished” 20:1

Digital infrastructure investment’ multiplier: key to economic growth – a collective responsibility

Direct Investment programme over five years L&G’s Investment in a £400m Development - Cardiff

LEGAL & GENERAL GROUP PLC 8 RIO sets a Precedent for UK Infrastructure Investment

Slow Money for Long-term Projects: Project RIO’s Unique Selling Points Economic Alignment (Asset manager and The EU-wide insurance and pensions Investor) industry manages €12 trillion of assets, so Local knowledge and independent infra/regeneration experience (eg Salford, a small re-allocation of assets will make a English Cities Fund) can be deployed for big difference. our 3,200 global pension and SWF clients

Approach pioneered with PGGM – major Dutch pension fund - £750m Legal & General is showing the way: Flexibility: bilateral/multilateral syndication - FUM: LGIM, Savings £850bn allows selectivity - L&G Property Manages £14bn Creating an institutional asset class - Annuity Funds £45bn

- Direct Investments £6.5bn Rio Investments to Date Thorpe Park, Leeds: £162m; 13,000 jobs Institutional money invests long-term: Cardiff Central: £450m; 10,000 jobs portfolio includes 30, 40,50 year investments Strong Pipeline: two further transactions in the next six months

LEGAL & GENERAL GROUP PLC 9 Slow Money/RIO

Central Square Cardiff • Development Value c£450m • One of our £6.3bn Direct Investments • Preferred site for BBC Wales • Local partner: Rightacres

Thorpe Park Leeds • £162m • One of our £6.3bn Direct Investments • 60,000Sq Ft Offices and 300 homes in Phase 1 • Local Partner: Scarborough Group

LEGAL & GENERAL GROUP PLC 10 Bracknell: Slow Money, from Slow Start to Fast Progress

• JV with Schroders • £200m Regeneration • Residential Opportunities: Bracknell and Crowthorne

• 14 Years to start • Now Proceeding “at pace” • Crowthorne residential includes “Green Belt”

LEGAL & GENERAL GROUP PLC 11 Crossrail 3: - Leeds and “Ordsall Chord-sized” investments

Forecasts show demand for peak time rail services into Manchester growing 37% by 2019. The Ordsall Chord, costing £85m will connect Manchester Piccadilly, Oxford Road and Victoria stations. The benefits: • Two new fast trains per hour between Manchester Victoria and Liverpool • Six fast trains instead of four an hour between Leeds and Manchester “If you laid the Central line across • Faster journeys between Manchester, the Pennines it would actually connect Leeds and Liverpool Manchester and Leeds.” • A new direct service through Manchester city centre to • Faster journey times to Hull, Newcastle and the North East

LEGAL & GENERAL GROUP PLC 12 Energy Opportunities – eg Photovoltaic and Wind

UK realised power price (real£/MWh)

Hinkley ‘C’ Today’s Price

Hinkley ‘C’ Indexed to 2030

Solar powered growth could contribute in excess of £9.5 billion in contributions to UK GDP over 2014-2030 according to the Centre for Economics and Business Research (CEBR) as a result of large scale PV capacity investments and electricity generated.

LEGAL & GENERAL GROUP PLC 13 Every Day Matters: our Social Purpose

“L&G’s clear aim is to be economically and socially useful…to be a force for good in society and to make every day matter for our customers and colleagues.”

LEGAL & GENERAL GROUP PLC Being a Disruptor is a Privilege and a Responsibility Being an Infrastructure Disruptor is a Privilege and a Responsibility FTTCS Infrastructure Summit, Europe Conference 2015 Dr Nigel Wilson DrChief Nigel Executive Wilson Officer OctoberOctober 2015 2015 ChiefLegal Executive& General Group Officer Legal & General Group

THANK YOU.

LEGAL & GENERAL GROUP PLC LEGAL & GENERAL GROUP PLC