Infrastructure sales meet
pension funds

Growing market

The size of the global market for infrastructure investing is between $10 trillion and $20 trillion, according to Pension Fund Investment in Infrastructure, a 2009 working paper by the Organisation for Economic Co-operation and Development (OECD). Alternative investment-industry researcher Preqin says there are 1352 infrastructure investors worldwide and the mean allocation to the asset class is 4 per cent of their total portfolios. In its January report, 2011 Infrastructure Fundraising and Deals, Preqin found that funds typically aim for a mean target allocation of 5.3 per cent. More than a third of infrastructure investors worldwide were public or private pension funds and most are located in the US, UK, Australia and Canada. Preqin also finds that 81 per cent of investors surveyed prefer to invest in unlisted funds and 31 per cent saying that they favour direct investing.

Bypassing funds managers

AustralianSuper’s preference for investing through funds managers may be starting to change. The fund has alleviated some of the drawbacks of open-ended funds – particularly when investors have different objectives and time horizons – by investing in pooled funds run by IFM. AustralianSuper is part-owner of the manager.

The fund aims to invest 11 per cent of its capital in infrastructure and will maintain this weighting as it grows in size. To do this, AustralianSuper may need to bypass pooled funds and invest directly in assets, particularly in Australia, where it is looking to increase its exposure to core infrastructure, Peasely says.

Some investors, such as Dutch asset manager APG – which manages the investments of the $329-billion Dutch pension fund ABP – have signed co-investment or “club” deals in recent years to avoid hefty management fees. Being closer to its investments, as well as investing with like-minded investors, has also allowed APG to set standards for its infrastructure investments that include improved environmental, social and governance factors and long-term performance benchmarks.

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