Phoenix Debt Deal Opens Australian Expansion Drive

Phoenix Group, the UK’s largest savings and retirements business, has launched its first investment in Australia with a £75mn private debt deal, signalling the start of a broader Asia-Pacific expansion.

The transaction, agreed with engineering company Worley, represents a deliberate push into the region as Phoenix seeks to diversify beyond its core UK base. Executives said it was the opening step in a “strategic expansion” across Asia-Pacific, where the scale of domestic pension funds has made Australia a natural starting point.

Phoenix manages £290bn of assets and is now joining other British pension funds and asset managers in targeting the Australian market. The move reflects not only the growth of private credit globally but also the growing links between the UK and Australia’s savings sectors.

First steps abroad

Phoenix executives have travelled repeatedly to Australia over the past year, meeting with superannuation funds and regulators to explore how the two systems can work more closely together. The Worley deal, while modest compared with Phoenix’s overall balance sheet, is seen inside the group as the opening of a pipeline.

Mike Ambery, retirement and savings director at Phoenix, told the Financial Times that Australia is viewed as a “benchmark” for the pensions industry, often seen as the “golden child” because of its compulsory superannuation system and consistent inflows. “We will further strengthen those ties and look for assets to invest in,” he said.

For Phoenix, the attraction lies not only in Australia’s pool of investable assets but also in the chance to gain exposure to infrastructure and energy projects that match its long-term liabilities. The Worley facility gives it a foothold with one of the country’s largest engineering groups, which has clients including BHP, Rio Tinto and Woodside Energy.

Deepening ties between markets

Australia and the UK have longstanding economic links, underpinned in recent years by the free trade agreement signed in 2021 and ratified in 2023. Officials and investors on both sides see pensions and infrastructure investment as a natural extension of that relationship.

David Camerlengo, a commissioner with the Australian Trade and Investment Commission, welcomed Phoenix’s move as a “wonderful example of the bilateral investment flows between our nations”. He said the two countries’ “deep” historical trade relationship was being reinforced by direct investment commitments.

The UK government is considering hosting an Australian superannuation summit later this year, according to people familiar with the plans. The idea would be to promote co-investment opportunities and bring together some of the world’s largest pools of retirement savings.

A competitive landscape

Phoenix is not the only UK player with designs on Australia. Legal & General, Britain’s biggest asset manager, has also signalled its interest in building a stronger presence in the country. Gareth Mee, its chief investment officer for institutional retirement, said L&G invested only a small proportion of its balance sheet in Australian assets but was “interested to invest more, particularly given its mature infrastructure market”.

This interest comes as Australian superannuation funds, including AustralianSuper and Aware Super, expand in the opposite direction. Both have opened UK offices in recent years to strengthen their global reach, often taking large positions in infrastructure, private equity and real estate. The two-way traffic reflects a growing recognition that diversification works both ways.

Why Worley?

Worley, valued at A$6.7bn (£3.2bn), is one of Australia’s most prominent engineering and professional services firms. It provides consulting and project management to industries including mining, energy, chemicals and infrastructure. The company has a strong client base among some of Australia’s largest corporates and a global footprint across 45 countries.

By lending to Worley through a private debt structure, Phoenix gains direct exposure to a business at the centre of energy transition projects. Private credit, where investors provide loans directly to companies outside traditional banking channels, has become an attractive asset class for long-term investors seeking yield in a world of uncertain interest rates.

For Phoenix, the Worley deal serves multiple purposes. It diversifies the portfolio geographically, signals its seriousness about Asia-Pacific, and connects the group with sectors aligned to long-term demand, such as energy and infrastructure.

Broader strategy

Phoenix’s move into Australia is part of a broader search for growth outside its traditional insurance and annuities base in the UK. With £290bn under management, the group is under pressure to find new sources of return and to demonstrate that it can compete with global peers.

The company has been restructuring in recent years, streamlining costs and emphasising asset management as a growth engine. International expansion is seen as a logical next step, particularly into markets where pension systems are both large and stable. Australia, with superannuation assets now exceeding A$3.9tn, fits that description.

The appeal for UK investors is obvious. Australia’s mandatory superannuation contributions ensure steady inflows of capital, while the country’s infrastructure and resources sectors provide opportunities that match the long-term horizons of pension funds.

Building partnerships

Phoenix has made clear that it does not intend to act in isolation. Executives have emphasised the importance of partnering with Australian funds rather than competing with them. The aim is to encourage joint investments that can benefit both systems, whether in the UK, Australia or elsewhere.

Ambery said stronger two-way capital flows were essential. “Australia has been investing heavily in the UK and Europe. It is time we built the reverse flows as well,” he noted.

This spirit of partnership aligns with broader government objectives. Both London and Canberra have spoken of the need to deepen capital market links, not just through free trade agreements but through joint financial activity.

Challenges ahead

Despite the optimism, Phoenix faces hurdles. Expanding abroad requires not only capital but also local expertise, regulatory clearance and the ability to manage currency and political risks. Competition for attractive assets in Australia is intense, with local super funds, Canadian pension funds and US private equity groups all active.

Moreover, the UK pensions industry still bears the scars of past overseas forays that did not always deliver expected returns. Phoenix will need to prove that it can navigate Australia’s competitive environment while achieving returns that justify the effort.

Still, the symbolic value of the Worley deal should not be underestimated. For Phoenix, it marks a visible break from its UK-centric past and signals a determination to be seen as an international player. For policymakers, it demonstrates that British pension funds can play a role in deepening ties with one of the fastest-growing financial markets in the world.

Outlook

Phoenix’s Australian debut comes at a time when pension funds globally are searching for yield and diversification. With private credit booming and infrastructure demand rising, Australia offers a fertile ground for long-term investors.

If Phoenix can build on its first step and create durable partnerships with local super funds, it may help to shape a new phase of UK-Australia financial integration. For now, the Worley deal is small in scale but big in symbolism. It represents not only the beginning of Phoenix’s Asia-Pacific journey but also the strengthening of a trans-national relationship that has the potential to reshape the flow of retirement savings for decades to come.