Institutional Investors Flock to Australian Infrastructure

Roadwork

Pension funds and sovereign wealth funds poured money into Australian ports, highways and other infrastructure in 2015.

CalPERS started off 2015 by committing more than $500 million to Australian infrastructure projects; a Canadian pension fund followed with a $400 million investment in an Australian freeway.

More on the trend from Reuters:

Investment bankers predict that offerings of well-tested government assets and cheap money will lure conservative-minded long-term investors into deals, even as a sputtering Chinese economy hits demand for Australia’s natural resources.

Pension funds such as the Canadian Pension Plan Investment Board and sovereign wealth funds such as China Investment Corp, the Abu Dhabi Investment Authority and the Kuwait Investment Authority have already invested in Australian assets and could be prominent players in the new government sales.

“There’s a massive amount of money looking for yield,” said Geoff Rasmussen, managing director of Azure Capital, which helped telecom iiNet sell for $1.2 billion in 2015 and earned the 10th highest mergers and acquisitions (M&A) advisory fees for the year, Thomson Reuters data shows.

“Bank deposits and fixed income opportunities are so low-margin that people have turned to infrastructure as an alternative.”

Caisse de dépot et placement du Quebec, one of Canada’s largest pension funds, currently has 20 percent of its infrastructure portfolio invested in Australian assets.

 

Photo by Kyle May via Flickr CC License

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