Australia’s IPIF on the hunt for new infra fund

The FoF manager’s IPIF Core vehicle, established in 2015 and with $82.4m AUM, has achieved 9.5% returns since inception and is looking to expand.

Australian fund of funds Investment Partners Investment Fund is looking for a new vehicle for its portfolio, its executive director has told Infrastructure Investor.

“There could be room for one more fund in our portfolio, Nicole Connolly said. “We’re always assessing the universe of managers. We’ve got a very disciplined approach to adding new managers and it’s based on the assets they have in their portfolio.”

Established in 2015, IPIF Core Fund has A$115 million ($82.4 million; €70.9 million) of assets under management and currently invests in three Australian infrastructure funds: Utilities Trust of Australia, managed by Morrison & Co; AMP Capital’s Diversified Infrastructure Trust; and Colonial First State’s Global Diversified Infrastructure Fund. Since inception, the vehicle has provided investors net returns of just under 9.5 percent.
According to Connolly, IPIF Core is aiming for a split of 60 percent growth assets and 40 percent regulated assets, while the firm continually reviews which managers it works with to ensure it has the right balance.

The vehicle’s investors comprise smaller institutional players who cannot afford to access the large infrastructure funds alone, as well as self-managed superannuation funds and high-net-worth individuals. Its investors have all been Australian to date.

Connolly said that only a lack of scale was holding back smaller investors from the infrastructure asset class and that the risk-return profile on offer was very attractive.

“The unlisted infrastructure market is dominated by a handful of specialist funds that require minimum investments of A$5 million and in some cases A$25 million,” she said. “So, the smaller institutions haven’t been able to access this asset class.

“Plus, if you look at the SMSF portfolios today, a lot of them are dominated by cash, equities and property, so [infrastructure] offers them a way to diversify and to reduce the overall volatility of their portfolios. And it can provide a stable income which they might not be able to get from term deposits, which are at an all-time low.”