$12b industry fund bulks up infrastructure
The $12 billion industry super fund HOSTPLUS is building an in-house infrastructure team to evaluate assets, fresh from its investments in NSW ports and the Sydney International Convention, Exhibition and Entertainment Precinct at Darling Harbour.
"There will be more of those deals," HOSTPLUS chief investment officer Sam Sicilia told BusinessDay.
"We are building an infrastructure team. That means that will be able to assess more than one deal at the same time, which we haven't been able to do in the past."
Questioned on the size of the team, Dr Sicilia said: "By the time the deal arrives, you better have the people there. There isn't the time. The ports were six weeks."
HOSTPLUS made its first investment in infrastructure in 2000, and the asset class now accounts for about 10 per cent of its assets.
The fund recently joined forces with Industry Funds Management, QSuper, AustralianSuper, CBus, Hesta and the Abu Dhabi Investment Authority to buy 99-year leases on two NSW ports for $5.07 billion.
"We've just paid $5 billion, for example, for the NSW ports. What do they do with the $5 billion? Well, build more infrastructure assets: schools, rail, terminals, another airport in NSW, whenever they're going to do it," Dr Sicilia said.
"And so they sell the asset to us, we give them money, they build more assets, they then sell those to the super funds at the time who give them money to build more assets. And that's how you build a nation, it's quite interesting."
Industry group the Industry Super Network recently stated that industry super funds could invest $15 billion over the next five years in infrastructure, providing state governments with much-needed money and matching super's long-term focus with the country's growing infrastructure needs.
But caution remains, particularly about price.
Danielle Press, chief executive of the $6 billion Equipsuper, this week stressed funds were about retirement benefits of members, not the benefit of bankers, and any potential deal needed the right structure.
"That said, there is a pool of capital that is available and it is already invested in infrastructure ... I think what we need to do now is about finding the right structures for superannuation funds to invest through," she said.
The NSW government this week announced a new funding strategy for the $10 billion to $13 billion WestConnex road project in Sydney. It plans to fund the first stage of the 33-kilometre motorway as an equity investment rather than a capital grant. It then wants to fund the next stage by raising money from the private sector against the tolls on the roadway.