Prime Super: Infra investments are ‘beating key objectives’

Prime Super, the Melbourne-based superannuation fund with approximately A$6.7 billion ($4.3 billion; €3.9 billion) in assets under management, will continue to build out its infrastructure portfolio following the acquisition of two wind farms in Victoria, its CEO, Lachlan Baird, told Infrastructure Investor.

The fund added the 6MW Chepstowe and 6.8MW Maroona wind farms to its portfolio earlier this month in a deal worth around A$45 million, to bring its portfolio of wind farms to five. It previously acquired the Mortons Lane wind farm in 2021, followed by the Ferguson and Diapur wind farms in 2022, all located in Victoria.

The portfolio has a total value of slightly more than A$100 million and a combined capacity of 52MW, enough to potentially power 40,300 homes. The investments will be managed by PATRIZIA Infrastructure.

Baird told Infrastructure Investor the fund was “pleased” with how the assets had performed to date and so was keen to add further renewable energy generation to its portfolio.

“These assets are meeting all our investment objectives from a risk-return point of view, but they are also something that aligns us more closely with carbon reduction and ESG obligations that we’re looking at for the future,” he says.

“The overriding obligation for us is to ensure we get good, strong, long-term returns for the members of the fund. These assets are delivering benefits for us and they are the ones beating our key objectives.

“And by bringing five assets together, we can get synergies, which gives us a better outcome from a returns point view, as well as a better risk-return outcome.”

Prime Super does not have a net-zero commitment for its portfolio, like some of Australia’s larger superfunds, with Baird saying the fund is more focused on how it can “invest in the transition” to cleaner energy.

“We’re taking opportunities to add to existing assets to create a bigger facility,” he said. “Looking at those opportunities, we can see a better long-term return generation at a lower risk than the overall portfolio.

“The fundamental challenge we have at the moment is the overall economy and where it is going, which no-one knows. So for us, it’s about finding those opportunities where you have more certainty of return. There are a lot of questions about the valuations of alternative assets – but if you’ve got certainty over income streams, then you can have more certainty over valuations as well.”

The fund’s other infrastructure investments include commitments to SAREN Energy, a waste-to-power generator in Norway, and debt investments in solar power generation assets.

According to its most recent annual report covering the 12 months to the end of June 2022, Prime Super’s default MySuper fund option had an allocation to infrastructure of 12.5 percent, split between 6.3 percent classified as growth assets and 6.2 percent classified as defensive assets.

At June 30, 2022, its infrastructure portfolio was valued at a little over A$787 million. In addition to its relationship with PATRIZIA, the fund has made commitments to the First Sentier Wholesale Infrastructure Income Fund and Foresight Group’s Diversified Infrastructure Trust, among other funds.