OTPP and Morrison & Co’s UTA increase Sydney Desalination Plant stakes

The Canadian pension and the Australian core fund acquired a stake held by MIRA-managed The Infrastructure Fund to take full joint control of the asset.

Ontario Teachers’ Pension Plan and Morrison & Co, the latter on behalf of the Utilities Trust of Australia, have increased their ownership stakes in the Sydney Desalination Plant.

The two funds have jointly acquired the stake owned by the only other shareholder in the plant, The Infrastructure Fund, which is managed by Macquarie Infrastructure and Real Assets.

The deal takes OTPP’s ownership stake to 60 percent of the fund, while UTA’s stake increases to 40 percent. Infrastructure Investor understands that TIF’s stake stood at around 15 percent before the deal.

The value of the transaction was not disclosed, and Morrison & Co did not respond to a request for comment.

The Sydney Desalination Plant was privatised by the New South Wales government in 2012. OTPP, UTA and TIF paid A$2.3 billion ($1.4 billion; €1.3 billion) to run the plant on a 50-year lease, with UTA and TIF both managed by Hastings Funds Management at the time.

UTA is an open-ended core infrastructure fund with more than A$6 billion in assets under management as of 30 June 2019, delivering an annual net return of 11.58 percent from inception in 1994 to 30 June 2018.

SDP can supply up to 250 million litres of drinking water per day, equivalent to 15 percent of Sydney’s drinking water needs. It had been mothballed since July 2012 before restarting early in 2019 after Sydney reservoirs fell below a trigger point of 60 percent capacity.

In a statement, OTPP senior managing director, infrastructure and natural resources Dale Burgess, said: “SDP has been a great investment for Ontario Teachers’, and this incremental acquisition demonstrates our commitment as long-term, dedicated and constructive owners. Australia remains an important investment destination for us, particularly as we look to expand our portfolio in the Asia-Pacific region in the coming years.”

Paul Newfield, head of Australia and New Zealand for Morrison & Co, said that SDP “fits the bill” as a business that supports a vital community need and is a “high-quality and well-managed core infrastructure asset”.