QIC, the former owner of Australia’s Queensland Motorways, has started its journey on a new expressway. The $57 billion asset manager last month announced that it had garnered $528 million in “initial commitments” for its Global Infrastructure Fund (QGIF) at the end of last year – barely three months after Infrastructure Investor revealed QIC planned to collect capital for such a venture.
It is always hard to know exactly when a fund manager starts raising a vehicle, as the official launch is often preceded by pre-marketing consultations with potential investors. And the Brisbane-headquartered firm was careful to note that the fundraising news came by way of an “update”, and therefore did not mark an official first closing. Still, the figure announced by QIC marks good progress towards the fund’s target, which sources close to the matter have said stands at around $1.5 billion.
Widening the base
Also encouraging is the pool of investors that have now pledged to the platform. In addition to two QIC “foundation clients”, these also include two new limited partners, in the form of a “major” Australian superannuation fund and an Asian sovereign wealth fund. More may come once the vehicle gains regulatory fund registrations in a number of other OECD jurisdictions, a process underway that is likely to further open the base of potential investors the firm can target.
The initial momentum behind the fund may owe to the calibre of people chosen to run it. In February, QIC announced that it had chosen Paul Costello, the first chief executive of Australia’s A$109 billion (€75 billion) Future Fund and former head of New Zealand’s NZ$27.5 billion (€18.0 billion; $20.7 billion) Superannuation Fund, as independent chairman of its QIC Global Infrastructure Investment Committee.
The body also comprises founders Ross Israel and Matina Papathanasiou, two QIC partners on a rotating basis, and independent expert Peter Forbes. Israel welcomed the arrival of Costello, who he described as a “lateral thinker” and “professional challenger with deep industry experience to provide extensive value add and assurance”. In October last year, the firm announced it had hired Vittorio Lacagnina as a director from US fund manager SteelRiver Infrastructure Partners to lead its fundraising efforts across North America and Europe.
The vehicle also seems to be responding to a growing demand for worldwide infrastructure exposure through co-mingled vehicles. “The QGIF has been created in response to demand from QIC’s existing clients. It follows the same path of evolution the firm has taken with other asset classes such as Global Real Estate and Global Liquid Strategies where many of its clients invest through fund structures,” says Israel.
More generally, he added, the fund’s launch is a response to growing allocations to infrastructure among investors globally. “A healthy pipeline of potential investments and a desire to expand our successful strategy globally are also influences. This helps us attract and retain industry best investment talent.” The vehicle is expected to target investments in the three broad sectors of transport, energy and utilities, and social infrastructure and public-private partnerships.
It is worth noting that, at a time when much is said about limited partners’ appetite for direct and co-investment programmes, co-mingled, global vehicles seem to be enjoying a bit of a revival. Fellow Australian fund manager AMP Capital last year initiated a major move to take this interest into account, by converting a Europe-focused, open-ended vehicle into a global, closed-ended one with a target of $2 billion – comprising $1.25 billion of fresh commitments and a $750 million portfolio of seed assets.
The company has since implemented a raft of changes to give its business more of an international flavour. Scott Davies, formerly the Australia-based global head of infrastructure, left the firm towards the end of last year; at the same time, Boe Pahari, previously head of infrastructure for Europe and the Americas, joined the firm’s leadership team and assumed responsibility for the Australian and Indian infrastructure equity teams. A reshuffle this year then saw three senior executives leave and three promoted to head a reduced number of infrastructure equity divisions.
As with every customer business, the ‘people dimension’ is key to infrastructure fundraising success – a factor both QIC and AMP appear to have prioritised.