Industry super funds in A$10bn infra push

A report by a body representing 15 Australian super funds says investing in unlisted real assets has helped these institutions outperform peers.

Australia’s industry super funds are planning to invest at least A$10 billion ($7.68 billion; €6.92 billion) in infrastructure projects Down Under over the next five years, according to a report by Industry Super Australia.

The body, which represents 15 not-for-profit industry super funds such as AustralianSuper and Cbus, said the capital would be invested in upgrading ports, airports, roads, rail and other infrastructure assets.

Experts cited by the report estimate that Australia currently faces a public infrastructure investment shortfall of about A$80 billion, or around seven percent of Australia’s existing stock of infrastructure. ISA argued that industry super funds have “the scale, expertise, and willingness” to drive large-scale investments in partnership with the government. 

The report also noted that the funds, which have a long history of investing in infrastructure, have outperformed their retail counterparts by 1.7 percent a year on average over the past 19 years. It said that investments in unlisted assets, especially real assets, has accounted for nearly two-thirds of the outperformance. 

Assets held by superannuation funds, excluding the Future Fund, totalled over A$2.02 trillion as of June 2015. Industry super funds represented around A$434 billion, or 17 percent of that pool, and had invested nearly A$27 billion in unlisted global and domestic infrastructure. 

ISA called on state and federal governments to be more proactive in partnering with industry funds to develop an investment pipeline of Australian infrastructure projects, which it said would help boost economic growth and diversify the portfolio in which super funds members’ savings are invested. 

Last month, IFM Investors and AustralianSuper acquired a 50.4 percent stake in the lease of Ausgrid for A$16.2 billion. The “all-Australian” consortium had submitted an unsolicited offer after the Treasury blocked bids by China’s State Grid and Hong Kong’s Cheung Kong Infrastructure in September, citing national security concerns.