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Infrastructure

Cbus CIO: Growing scale, capabilities open door for greenfield investments

The One40William shopping center in Perth, operated by Cbus Property

The fast-paced growth of Australian superannuation funds and their build up of internal investment teams are setting the stage for those funds to play a much broader role in infrastructure development projects at home and abroad, according to one industry veteran.

Kristian Fok, Melbourne-based chief investment officer of Cbus, the A$45 billion ($34.2 billion) superannuation fund for Australia's construction industry, said in a speech Wednesday to building executives that the fast-paced growth of the country's super industry, both in terms of assets and capabilities, will leave a growing numbers of funds positioned to take on the risks of new — or "greenfield" — infrastructure projects going forward.

At present, institutional investors largely prefer to invest in existing — or "brownfield" — roads, ports and power facilities, rather than taking on the risks involved in planning and constructing new projects.

Australia's superannuation industry, with combined assets now of roughly A$2.6 trillion, is projected to double by 2025, and many funds are building internal teams with the expertise to make greenfield projects "a real consideration," Mr. Fok said.

"Superannuation funds will have a greater appetite to participate across the project lifetime as developer, financier, direct owner, operator or to get involved in discrete parts of a project," he predicted.

Mr. Fok said in an email that Cbus at present manages 10% of its portfolio internally. That total is poised to rise to 15% in the near term and 35% by 2022.

"Our new internal capability will bring us closer to the market, improve our insights and give better access to deals," he said.

At present, greenfield projects account for a "minimal" portion of Cbus' A$4.5 billion in infrastructure investments, said Rod Masson, a spokesman for the fund.

Mr. Fok said in the email, "We are growing scale and internal capacity that will make this more attractive in the future."

He cited Cbus' April investment in a portfolio of wind and solar renewable generation assets in West Australia, known as Bright Energy Investments, alongside the Dutch Infrastructure Fund and a West Australia state government-owned electricity generator and retailer, as "the commencement" of Cbus' infrastructure investments with "greenfield elements."