Infrastructure Investor: Australia Roundtable, 2020

Our annual Australia roundtable discussion will be taking place in Sydney next month. For those looking to weigh in on the latest developments, challenges and opportunities facing this dynamic marketplace, we have six seats to offer.

The discussion will be written-up and published as the six-page centrepiece of the May issue of Infrastructure Investor.

The full synopsis for this year’s roundtable is detailed below.

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Australia Roundtable 2020: Synopsis

The mid-market is where the action is at in Australia: at least, that’s what the participants at our 2019 roundtable said, confirmed by strong activity in the last 12 months.

The pipeline of opportunities has proved robust for those investors who know where to look, particularly in the renewable energy, digital infrastructure and transport sectors. But with regulatory and policy debates could present bumps in the road for some of these areas, with energy in particular a continuing source of frustration for some.

Meanwhile mergers between superannuation funds continue apace, as the LP landscape continues to shift. This is set to concentrate more capital, and consequently more power over investment decisions, in the hands of a smaller number of funds, which is sure to create an interesting landscape for GPs to navigate.

Inevitably this is leading both domestic fund managers and LPs to look offshore, both to developed markets like the US and Europe, and to the perceived high-risk emerging economies, particularly Asia.

And ESG considerations are stronger than ever, with the bushfire crisis of summer 2019-20 sharpening minds and highlighting the need for everyone to factor in climate risk when building a portfolio.

Appetite remains strong among domestic LPs, though, and Australia continues to remain an attractive destination for offshore LPs looking for a stable, mature economy with experienced asset managers.

With that in mind, the Australia roundtable will examine, among other topics:

Macro outlook: What impact, if any, has the US-China trade war had on the sector, given Australia’s strategic location in the region? Are investors predicting the end of a cycle, and what opportunities and challenges will that present? Is the low-interest-rate environment here to stay – and if it is, what implications does that have?

Superfund landscape: The trend for superfund mergers continued to accelerate in 2019, with First State Super and VicSuper confirming they would create the country’s second-largest LP in 2020, and QSuper and Sunsuper in talks to become the biggest. What impact could this have on the infrastructure investment landscape? Will a more consolidated superfund sector broaden opportunities for GPs, or lead to more direct investing without fund managers?

Renewable energy: There continues to be a lack of clear energy policy at the federal policy in Australia and the appetite for investing in renewables varies among investors. Is the sector still attractive and why? Is it still attractive relative to other markets? Have arguments over Marginal Loss Factors and other regulatory issues dampened investment? We have also seen the states increasingly forge their own path on policy – is this a good or bad thing?

Regulation: 2019 saw a public argument break out between airlines and airport owners over ‘excessive profits’, while some port owners were also criticised by the ACCC. Were these isolated cases owing to specific market conditions? Or is Australia at risk of a clampdown on regulated asset returns?

Dealflow and returns: Where are new assets coming from and what are the most promising sectors for deal flow? State governments are continuing to use PPPs when procuring projects – is this set to continue? Do investors have to get more creative to find infrastructure assets? Is infrastructure debt increasing in attractiveness as equity returns compress in some cases?

Emerging markets: Are Australian LPs more open to emerging markets infrastructure now?

With core infrastructure assets in developed markets trading at high prices, does that make emerging markets relatively less risky than before?


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