Tideway Tunnel: Why Allianz helps to protect River Thames

Andreas Lindner: Planning for the future involves looking ahead over many years and even decades. Those who start planning in their youth and later derive a lifelong income from it are looking well into the second half of this century. As a life insurer, Allianz accompanies its customers over decades, aligning its investments for the long term and with stable value. Projects like Tideway, with a long duration fit perfectly into this approach. Allianz is celebrating its 135th anniversary this year – we have a lot of experience with long-term projects.

Andrew Cox: Indeed, early on, the project was not only a good addition to our portfolio, but it also offered numerous benefits to London, such as improved biodiversity, cleaner public spaces along the river, and a healthier environment for future generations. It also provided an opportunity to test an innovative funding model combining government support with low-cost institutional capital, while ensuring timely completion within an acceptable margin of the original budget. Most importantly, bill payers have seen the project being delivered within the originally estimated £20-25 range on the average annual water bill – an achievement, we are especially proud of.

Ludovic Subran: Managing a 120-year investment requires meticulous planning and collaboration with dedicated project management teams. Andrew and his team have been at the helm of the project from day one and will continue to keep the company on track for the long journey ahead. The project therefore benefits from Allianz's experience and scale in infrastructure investments, which helps ensure effective oversight of health, safety, construction, financing, and regulatory compliance.

Andrew Cox: Managing large-scale construction projects requires expertise and experience. And the expertise and experience within Allianz is truly remarkable. With currently around EUR 40bn invested across infra debt and equity we are a major player in this asset class. The project has its own management team and through construction has additionally had a Project Manager, who together have overseen the day-to-day build and managed the contractor interface. Allianz will continue to support the project with a team of inhouse infrastructure experts who can oversee the management team and advise across HSE (Health, Safety and Environment), construction, financing and regulation and make use of their in-depth experience from managing other large infrastructure businesses in the portfolio.

Ludovic Subran: Today's higher interest rates have increased the cost of borrowing; however, Tideway is not exposed to these higher rates as it was able to secure long term financing at attractive terms in the early years of the project. The scheme also provides protection against future increases in interest rates and inflation. As such, Tideway is a sound investment due to its regulated nature and long-term stability, providing predictable cash flows. This is what makes investing in such long-term investments financially feasible. Today, the investment continues to meet Allianz's expectations, delivering environmental and infrastructure improvements and proving resilient in the face of market volatility.

Andreas Lindner: Yes, conditions matter, and the ones found in Tideway offer stability and long-term return opportunities, making them ideal for pension products and asset expansion.

Ludovic Subran: The Thames Tideway Tunnel aligns with the UK's broader environmental goals, including the government's push to achieve net-zero emissions by 2050. It is a shining example of how private capital can play a key role in developing public infrastructure, improving urban ecosystems and water quality. Allianz sees Tideway as a blueprint for future collaborations and is open to exploring similar opportunities that meet its investment criteria.

Andreas Lindner: Infrastructure investments have long been part of Allianz’s strategy, offering stable returns and significant long-term societal benefits. Such alternative assets are difficult for private investors to access individually due to their scale and complexity but can be accessed via pension products due to their long-term investment nature and stable returns. 

Andrew Cox: Tideway is a template project that has developed a financing model that can and is being rolled out for other large-scale infrastructure projects (e.g. water reservoirs and nuclear plants in the UK); this shows that the public and private sectors can work collaboratively together to deliver infrastructure on time and on budget and without overburdening consumers. Given the huge infrastructure gap joining forces can make a stark difference.