Infratil commits A$100 million to Aussie PPP

The New Zealand-listed infrastructure fund is hoping to deploy its capital through a joint platform in partnership with its manager.

Infratil, a New Zealand-based infrastructure investment company managed by H.R.L. Morrison & Co, has committed to investing A$100 million (€70 million; $96 million) in Australian public-private partnerships via the Australia Social Infrastructure Partners (“ASIP”) platform, according to a firm statement.

The ASIP platform, established last year, is a joint venture between Morrison & Co. and Leighton Contractors consisting of two investment vehicles. The funds are targeting between A$300 million and A$500 million altogether.

Morrison held a A$100 million first close on the platform last year, and is “currently in discussion with a select group of institutional investors regarding a second financial close of the ASIP vehicle,” according to the firm’s website. This A$100 million, however, will not be part of that second close, according to a Morrison spokesman.

The alliance established by the ASIP platform gives Morrison and its institutional investors the opportunity to participate as equity investors in Leighton’s future PPP projects. The partnership is seeking to tap the A$30 billion pipeline of availability-based PPP projects in the Australian market.

Infratil will now be one of the institutional investors part of that alliance, according to the firm statement. The A$100 million will be committed to the funds themselves, but will be called only on a deal-specific basis, according to the spokesman.

The commitment will be formalised before the end of the year, and Infratil expects to deploy the A$100 million over the next two to three years. “The terms of the strategic alliance allow for additional co-investment by Infratil in Leighton Contractors’ PPP projects and also provides the flexibility to pursue greenfield projects where Leighton Contractors is not involved,” the statement added.

ASIP currently holds 9.95 percent and 49.9 percent respectively of the equity of the A$1.85 billion New Royal Adelaide Hospital and A$232 million South East Queensland Schools PPP projects. Leighton is also currently participating in bids for the Queensland Schools, North-West Rail (NSW) and East-West Link (Vic) availability-based PPPs.

“Infratil has been assessing the Australian PPP market for some time, and in particular the best access point to pursue the significant pipeline of development opportunities that exists across the education, health and transport sectors,” commented Marko Bogoievski, Infratil's chief executive. “Infratil has observed that greenfield PPP investments offer risk-adjusted development returns that are comparable to the returns available in adjacent infrastructure sectors such as greenfield Australian wind projects.”