PIP Fund invests in Aussie convention centre

The New Zealand infrastructure fund’s first investment saw it purchase a 50% stake in a convention centre in Melbourne from Plenary Group. PIP Fund said it will invest in a similar opportunity in New Zealand and may team up with Plenary Group again for that investment.

Morrison & Co Public Infrastructure Partnership Fund, known as PIP Fund, has announced its first investment since it was launched last October to target investments in New Zealand social infrastructure.

Despite its stated goal of investing in New Zealand, its first investment consists of the purchase of a 50 percent stake in a social infrastructure project located in neighbouring Australia: the A$1.4 billion (€980 million; $1.3 billion) Melbourne Convention Centre, operational since 2009.

The seller was Australian investor Plenary Group, which retains the other half of the joint venture that now owns the 25-year public-private partnership (PPP) contract for the convention centre. Neither party disclosed the value of the deal.

The PPP contract for the convention centre is free of demand risk and receives availability payments from the public authorities – payments contingent on the private sector making the asset available according to pre-agreed standards.

In a nod to its stated goal of investing in New Zealand social infrastructure, Steven Proctor, executive director of the PIP Fund, said the fund is looking forward to investing in a similar project in New Zealand:

“Whichever site the government selects, the PIP Fund would like to fund and deliver the New Zealand National Convention Centre as a public-private partnership,” Proctor said. He also added to the local press that “it would make a lot of sense” to bid for the greenfield asset together with Plenary Group, although he hastened to clarify that no discussions had been held regarding the project.

Proctor also pointed out that the New Zealand government’s recent intention to consider alternative financing options, including PPPs, for projects worth more than $25 million should generate plenty of opportunities for PIP Fund to invest in.

PIP fund was launched last October with a cornerstone investment of NZ$100 million (€55 million; $71 million) from the NZ Superannuation Fund to help fund the country’s social infrastructure needs. In May, a listed vehicle owned by Morrison & Co and Craigs Investment Partners raised an additional NZ$41 million for PIP Fund. PIP Fund is aiming to raise a total of NZ$200 million.