Legal & General’s Pete Gladwell speaks to PMP about investing patient capital, originating assets and aligning institutional investors with public need
For all the attention now paid to productive finance and place-based investing, one hard truth remains: deploying institutional capital alongside the public sector is much harder than it looks.
Projects are complex, timelines are long and returns rarely fit the short-term models that characterise traditional development models. Yet for investors able to navigate the public-private ecosystem, the prize can be significant – stable, inflation-linked income, material outperformance versus public markets and demonstrable impact in the real economy.
Few institutions have pushed further down that path than Legal & General (L&G). Sitting within the group’s institutional retirement division, Pete Gladwell leads the firm’s public investment activity, deploying annuity and long-term capital into housing, regeneration, social infrastructure and lending to public bodies. His remit spans L&G’s balance sheet and its asset management capabilities, allowing the group to originate, structure and scale investments that sit at the intersection of public need and private capital.
“The fundamental challenge,” Gladwell says, “is converting capital into impact – taking billions of pounds of long-term savings and turning them into assets that actually make places and communities better.”
Traditional models fall short
Gladwell’s starting point is that many of the UK’s most pressing investment needs – housing, infrastructure, civic assets – are poorly served by short-term return-on-capital models. Rising interest rates and construction costs have only exposed those weaknesses further.
“If you take housing, the typical housebuilder or developer model works fine when rates are very low,” he says. “But when financing costs rise, you start to find the limits of relying on short-term capital and selling homes overseas to deliver what the country needs.”
In markets such as London, Gladwell argues, the old approach – building, selling globally and allocating the minimum viable level of affordable housing – is no longer sufficient. The result is stalled delivery at precisely the moment when demand for housing and supporting infrastructure is most acute.
What is required instead, he says, is patient capital willing to build, own and operate assets for decades rather than years.
Long-term capital, properly aligned
L&G’s approach is built around public investment activity spanning housing, regeneration, healthcare, education and civic infrastructure – often within the same place and over long periods of time.
“We’re talking about investments with 20- to 40-year income horizons,” Gladwell says. “That includes housing itself, but also the infrastructure that supports it – such as such as offices that drive business growth and public assets like schools, hospitals, and education campuses.”
For investors with long-dated liabilities, he argues, this alignment is natural. These assets generate stable income streams underpinned by essential social need.
“Even with the advent of AI, people won’t stop needing healthcare, and won’t stop needing affordable homes,” he says. “That makes them very attractive investments for long-term capital.”
Crucially, the return expectations are different. L&G is not seeking private-equity-style internal rates of return. “We don’t need to make 15% to 25% upfront,” Gladwell says. “We’re often looking for long-term, single-digit returns that outperform equivalent public market investments like equities or bonds.”
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One of the most common misconceptions about investment in productive finance, Gladwell suggests, is that capital availability is the main constraint. In reality, the greater challenge lies in origination and execution.
“There’s lots of capital already there, and more that could be brought in,” he says. L&G deploys its own annuity capital alongside third-party investors, including local government pension schemes and international peers. “The issue is that these investments are not easy to originate and execute.”
Building the platforms, teams and relationships required to originate deals takes time and sustained commitment. L&G deliberately retained its development management capabilities even as many financial institutions exited the space.
“When others got rid of those teams, we kept ours,” Gladwell says. “Because without that expertise, and platforms like our affordable team, you simply can’t convert capital into impact.”
That capability also allows L&G to crowd in other institutional investors once projects are established. UK LGPS funds, overseas pension schemes and insurers have all invested alongside the group across housing and regeneration strategies.
Working with the public sector
Another defining feature of L&G’s model is how it engages with central and local government. Rather than approaching projects through formal procurement alone, the firm positions itself as a long-term partner. “When there’s a need for a new leisure centre, affordable housing or a college, we often get the first call,” Gladwell says.
In one recent example, a city required funding for a new college. The city will underwrite the income stream, allowing L&G to finance the project at a much lower cost of capital, improving viability for both sides. “That’s not a conversation that would happen with a typical developer secured via a typical procurement,” Gladwell says. “It requires a purpose-driven, collaborative partnership.”
He is careful to stress that developers still play a vital role — but their capital is not always suited to holding non-core assets for decades. “A housebuilder doesn’t want to tie up tens of millions in a doctor surgery or leisure centre,” he says. “That’s where our type of capital is much more aligned.”
Long-term investing alongside the public sector potentially raises political risk, but Gladwell takes a different view. “Central and local government increasingly recognise that the old models of delivery – the typical approach of running a procurement process over years – are not delivering fast enough,” he says. “That actually mitigates political risk in those places.”
Projects that deliver visible benefits – jobs, regeneration and civic pride – tend to enjoy cross-party support and longevity. For long-term investors, that stability is critical. “These decisions need to stand the test of time,” Gladwell says. “The more political stability there is, the more attractive the place and investment becomes.”
Fiduciary duty and returns
Perhaps the most persistent barrier to wider adoption of productive investment is the perception that impact and fiduciary duty sit in tension. Gladwell rejects that outright. “If you get these investments right, they outperform listed markets. That’s the business case we put in front of investment committees,” he says.
The challenge, he argues, is that these investments demand more from managers – deeper expertise, longer timelines and greater resource commitment. Done poorly, they can look like capital is simply being “given away”.
Clarifying fiduciary duty in legislation, particularly for trustees concerned about longer-dated returns, would help unlock more capital, he adds – especially from local government pension schemes, which are naturally well suited to the asset class.
L&G has committed £2bn to impact investment by 2030, and Gladwell expects broader institutional participation to follow. Government initiatives, including the Office for Investment and the National Wealth Fund, are helping to create more investable opportunities, but they are not a substitute for investor capability.
“You still need the expertise to navigate the system,” he says. “That’s what allows capital to move from intention to execution.”
For Gladwell, the lesson for other institutions is clear: success in productive finance is less about slogans and more about structure. “This only works if you have patient capital, the right teams and genuine alignment with the public sector,” he says. “When you do, the returns and the impact are there to be unlocked.”
Pete Gladwell will be speaking at Longview Networks’ Housing Investment Forum on 3 February 2026.