AMP acquires stake in $2.7bn desalination PPP

The Sydney-based fund manager has made its second investment in Australian social infrastructure within a month.

AMP Capital has bought a 5.2 percent stake in the Victorian Desalination PPP project from Pacific Partnerships, the project finance arm of CIMIC Group. 

This is the second investment made by the firm’s 10-year-old, open-ended Community Infrastructure Fund within a month. The fund acquired a Kalgoorile-based prison PPP last week. 

The facility is an A$3.5 billion ($2.69 billion; €2.44 billion) project procured by the Victorian government and undertaken by AquaSure, the company responsible for its financing, design, construction, operation and maintenance for 30 years. Commissioned in December 2012, the desalination plant has 23 years remaining to the end of its concession and the Victorian government said many of the plant’s key components have a 50 to 100-year life. 

The PPP project, located on the Bass Coast near Wonthaggi, is the largest desalination plant in the Southern Hemisphere. It is capable of supplying up to 150 billion litres a year – about one-third of Melbourne’s annual water consumption – without relying on rainfall. The project encompasses the desalination plant, an 84km transfer pipeline, connecting the facility to the grid as well as purchasing renewable energy credits. 

“The asset delivers stable, long-term monthly service payments from the Victorian government to our investors. This latest acquisition will increase CommIF’s exposure to the water sector as it will sit alongside existing water assets such as Riverland Water and AquaTower,” said Andrea McElhinney, the fund’s manager, in a statement. 

AMP acquired CommIF in 2010 from the Royal Bank of Scotland. The fund’s net asset value has since grown from about A$55 million to more than A$500 million in October 2016. The vehicle targets existing operational assets in the secondary social infrastructure market in Australia and New Zealand.