Challenger-Mitsui refocuses on Asia

The pan-emerging markets infrastructure partnership, with a $1.2bn fundraising target, now believes the choicest investment opportunities lie in China, India, Thailand, Vietnam and Indonesia.

The Challenger-Mitsui Emerging Markets Infrastructure Fund (EMIF) is refocusing its investment strategy on Asia, the fund’s head, Andrew Jones told InfrastructureInvestor.

“Many Asian countries are benefiting now from reforms they introduced after the Asian currency crisis” of 1997, Jones said. “More open governments and better managed economies with large foreign currency reserves make them particularly attractive for infrastructure investments.”

A joint venture between Australian asset manager Challenger Financial Services Group and Japanese trading house Mitsui, EMIF was originally going to target investments across a broader array of emerging economies in Asia, Africa, South America, Russia and former Soviet Republics.

EMIF began fundraising in June 2008. The firm, based in Sydney, is targeting $1.2 billion in commitments. To date, it has raised about $200 million.

In line with this strategy, the fund made two investments in Chile: Gas Valpo, a Chilean gas distribution company it bought in late June 2008 for $95 million, and Energas, a Chilean gas distribution company that it acquired for $41 million in November 2008 as a bolt-on to Gas Valpo.

Going forward, the fund will target 70 percent of investments in the Asia Pacific economies of China, India, Thailand, Vietnam and Indonesia. All are countries where joint venture partner Mitsui has numerous offices, especially China, with 25 offices.

Jones said the shift in focus was a response to the fact that in the near term Asia holds more opportunities for infrastructure investors.

“Asia has a huge need for new infrastructure and governments will have to sell some established assets to fund the new projects,” Jones said.

Jones believes that growth in Asia will be down on previous forecasts but will still run “well above” the US and Western Europe at about 5 percent.

EMIF will hang on to its existing investments in Chile, Jones said. The firm is still interested in investing in the country but will focus its energies on the Asia-Pacific region.