Two of the UK's largest local authority pension funds are to jointly invest up to £500m in infrastructure.

The link up between the Greater Manchester Pension Fund (GMPF) and the London Pensions Fund Authority (LPFA) could provide a significant boost to local road and house building, while supporting sections of regeneration linked to the development of the proposed high-speed rail link.

Pension fund leaders said the investment platform would initially focus on projects in Greater Manchester and London, which they described as 'key areas in driving growth'.

The agreement will allow both pension funds to raise their investment in infrastructure over the next three to four years.

Cllr Kieran Quinn, chair of the GMPF - the UK's largest local government pension scheme fund with assets worth £16bn - said: 'We are delighted to have formed this partnership alongside LPFA. In the UK we are only beginning to realise the potential for public pension funds to support the development of infrastructure projects, at the same time as delivering sustainable, high-quality returns to scheme members and employers.

'GMPF are long-standing investors in infrastructure and we look forwarded to using our experience and knowledge to help build this into something of great value to the UK as a whole, with an initial focus on Greater Manchester and London, which are two key areas in driving growth.'

Susan Martin, CEO of LPFA - which administers a £4.9bn pension fund to almost 20,000 employees and 40,000 pensioners - said: 'The creation of an infrastructure investment platform is another step towards closing our deficit.

'To meet our pensions liabilities we need a balanced portfolio that includes assets with a long-term profile. While at the same time by focusing on British infrastructure we are investing in an area that so badly needs it.'