Macquarie’s TIF faces redemption queue of more than 50% of fund – exclusive

The Infrastructure Fund is facing a large redemption queue as merging Australian superfunds seek to rebalance portfolios.

The Infrastructure Fund – the ex-Hastings Funds Management vehicle that is today managed by Macquarie Asset Management – has seen multiple LPs put in redemption requests that amount to more than 50 percent of the fund’s total assets under management, according to several sources with knowledge of the situation.

Infrastructure Investor understands that Australian Retirement Trust, Cbus Super and Hostplus have put in redemption requests, with ART’s request recently tipping the queue over the threshold of more than 50 percent of the vehicle’s assets.

Spokespeople for MAM, ART and Cbus Super declined to comment. Hostplus did not respond to a request for comment prior to publication.

It is the fund’s exposure to Australian airports and its stake in the Port of Newcastle that are the primary reason behind the redemption requests. Sources close to two of the funds in question said they had sufficient exposure to Australian airports through other investments and so did not need further exposure through TIF.

This has partly been caused by a spate of mergers in the superannuation sector. Around 70 percent of TIF’s unitholders are Australian superfunds, with a large majority of those undergoing at least one merger in the past five years. This has led many to seek to rebalance portfolios and reduce duplicate exposures to assets that they may have picked up as a result of a merger, as well as due to funds having different weightings in their asset allocations to certain types of assets, particularly transport.

In addition, Port of Newcastle is one of Australia’s primary coal export terminals and funds have said they no longer wished to have exposure to that type of asset because of ESG concerns. TIF owns a 50 percent stake in the port.

At least one fund is also understood to have made its redemption request after seeing the redemption queue grow in size, feeling they were left with little option but to seek a return of their own capital with so much other capital set to exit.

A source with knowledge of TIF said its investment returns have been strong in recent years, generating a net IRR of 9.6 percent over the past three years. This includes a net IRR of 10.4 percent for FY 2023, 12.9 percent for FY 2022, and a yield of around 4 percent in FY23.

Infrastructure Investor understands that MAM is actively pursuing several options to provide liquidity for redeeming unitholders. A source pointed to previous asset sales – including stakes in UK rolling stock company Porterbook, Royal Adelaide Hospital PPP consortium Celsus and Sydney Desalination Plant – as evidence that the firm could meet unitholder requirements, as these sales had generated a premium of around 20 percent to net asset value, on average.

A stake in one of TIF’s remaining assets, Queensland Airports Limited – which owns airports at Gold Coast, Townsville, Mount Isa and Longreach – is currently on the market.

TIF was established in 1998 with an investment in Gold Coast Airport before its management was taken over by the now-defunct Hastings Funds Management in 2000. The fund grew to include stakes in Perth Airport, Royal Adelaide Hospital PPP, Porterbook, Sydney Desalination Plant, the land titles registry of New South Wales, and the Port of Newcastle.

MAM assumed management of the fund in 2018 following Hastings’ demise. TIF now has a little over A$2 billion ($1.3 billion; €1.2 billion) in assets under management.