Morrison & Co preparing sale of PIP Fund I assets in Australia, New Zealand

The sale, from its first Public Infrastructure Partners Fund, is expected to generate strong returns in what's seen as a hot PPP market.

Morrison & Co is preparing to divest the assets held in its Public Infrastructure Partners Fund (PIP), sources have told Infrastructure Investor.

The New Zealand-headquartered fund manager has been in discussions with investors and clients about whether go to the market with PIP and its assets, with the possibility of the process beginning formally in the next couple of weeks.

A final decision has yet to be made about the sales process. However, market sources consider the process more than likely to proceed and that a sale will close before the end of 2019. The process could involve offloading the portfolio in its entirety or selling off individual assets.

Infrastructure Investor understands that the move to explore a sale has followed discussions with investors in the fund, with some being of the view that a hot market for PPPs means now is a good time to divest.

Morrison & Co established PIP in 2009 as a vehicle dedicated to investing in public-private partnerships in Australia and New Zealand. Its launch followed an announcement from New Zealand’s then-government that it would look to procure new social infrastructure through PPP deals.

The fund closed in 2010 on NZ$160 million ($108.4 million; €96.6 million), supported by a NZ$100 million cornerstone investment from the New Zealand Superannuation Fund. The fund is fully deployed and other investors included several New Zealand-based community trusts and institutional investors, as well as the New Zealand Social Infrastructure Fund, a listed retail feeder fund established by Morrison & Co and Craigs Investment Partners.

PIP owns equity stakes in PPP assets, including the Melbourne Convention Centre, Bendigo Hospital key health-worker accommodation, and University of Wollongong student accommodation in Australia. It also owns the Hobsonville Point Primary and Secondary Schools, NZ Schools II PPP and Auckland Prison PPP projects in New Zealand. The Hobsonville Schools transaction, completed in 2012, was New Zealand’s first PPP deal.

Multiple market sources familiar with the assets said they were performing well and were likely to prove attractive to buyers, especially at a time when PPP assets are in demand.

According to Morrison & Co’s website, PIP aims to generate “double-digit returns that provide protection from movements in CPI” and has “exceeded its benchmark return every year since 2013”.

Morrison & Co raised NZ$120 million for a successor fund, PIP II, in 2016, which focuses exclusively on PPPs in New Zealand.

Morrison & Co declined to comment for this story.