‘Asia or bust’ and other takeaways from our Australia Forum

Challenges abound but 'unmissable' opportunities remain post-pandemic, especially for infra investors keeping their eyes trained on Asia.

Infrastructure Investor’s Australia Forum, held last week, saw delegates return to Melbourne for the first time since the pandemic started. Facing a considerably altered geopolitical and macroeconomic environment since the forum was last held in person four years ago, fund managers, investors and industry experts delved into the most pressing challenges – and opportunities – facing the asset class.

Asia or bust

Despite the uncertainty of today’s macroeconomic environment, Asian emerging markets are an unmissable opportunity, according to IFC Asia Pacific infrastructure director Isabel Chatterton. While challenges no doubt exist – and finding “the right capital” is chief among them – understanding and acting on Asia’s potential for growth is a matter of survival for investors, Chatterton told the forum.

“There’s never a shortage of capital [in the emerging markets of Asia] – the amount of new capital providers who are coming into the region is absolutely astonishing – but we need capital that understands the region, has patience and is going to definitely embed sustainability targets within it,” she said.

“The opportunities are immense. The momentum embedded in Asian growth is enormous and any corporates or investors who are not present in Asia today won’t exist in 50 years’ time.”

In-demand infra insight

Heightened geopolitical risk was also widely discussed, with energy security a notable new addition to the topics at the forefront of investors’ minds. According to Stonepeak managing director Steven Ciobo, governments of all persuasions will be leaning on the private sector for guidance on achieving secure energy systems while ensuring renewable energy targets are met.

“When you get an alignment between government policy and your investment thesis, that of course is going to generate the best return that you possibly can,” Ciobo added.

“There is a very strong focus on energy security… and governments are looking for the private sector to provide insight and expertise around what that investment looks like that can meet the twin goals of energy security [and the] energy transition. When you’re able to define an investment opportunity that does that, [that] is where you’re going to be able to achieve the kind of outcomes you’re looking for.”

Superfunds stay the course

Australia’s Your Future, Your Super reforms and its move to separately benchmark unlisted infrastructure against the MSCI Australia Quarterly Private Infrastructure Index (Unfrozen) – following a backlash to an initial plan to compare super-funds’ unlisted investment performance with listed benchmarks – has been the subject of much debate since MSCI’s unlisted benchmarks were introduced last year.

Despite the consternation caused at the time, implementing the new index has not led to a marked change in the investment strategies of a panel of super-fund private markets investors who spoke at the forum – including Aware Super infrastructure portfolio manager Maria Donnelly, Cbus head of private markets Alexandra Campbell, and UniSuper infrastructure investment manager Sandra Lee. All three referenced a review into Your Future, Your Super that is currently underway, though, and it was clear that investors were still hoping for tweaks to the benchmark.