The New Zealand government wants the global investment community to know three things: The island country is open for business; infrastructure investment opportunities are blossoming; and, in a world full of complexity and volatility, New Zealand is a safe haven.
Those messages were delivered by Prime Minister Christopher Luxon and his cabinet, who hosted a curated group of institutional investors, asset managers and other infrastructure-related executives representing a total $6 trillion in Auckland in March.
Over two days, attendees heard from various ministers about the infrastructure pipeline and growth sectors that are in need of their investment — with the aim of showcasing the country and bringing long-term capital into its infrastructure market, bringing growth to the economy, and jobs and other benefits to New Zealanders.
The government is looking for those attendees — which included Canada’s OMERS Infrastructure, a handful of Middle East-based sovereign wealth funds, and infrastructure specialist asset managers — to help to plug an estimated NZ$100 billion to NZ$200 billion ($57.4 billion to $114.9 billion) infrastructure deficit.
Delegates from 14 countries had full access to Luxon, Minister for Infrastructure Chris Bishop and other members of the New Zealand government, Luxon told Pensions & Investments, and the message they heard was clear: “We are open for business.”
“In a very volatile and complex world … New Zealand is a very good investment safe haven,” Luxon said, also highlighting the country’s “abundant natural resources” and talented people.
Bishop in a separate interview said the “pitch is (that) the world’s at a pretty interesting place right now, and we’re a safe, developed economy,” with rule of law and stable institutions.
Even with New Zealand possessing those attributes, the world is still “competitive… (and) global investors are chased by 195 countries,” Luxon said. New Zealand, he added, is not high on the list of countries known for incoming foreign direct investment, and “productivity has not been what we want” it to be. “We have to attract more capital into the country,” he added.
To do that, the government — which has been in power for about 16 months — has already made significant changes to planning and other laws, and set up Invest New Zealand, an agency to attract foreign investment into key sectors.
The “vibe was great” at the summit, and gave the government the chance to understand what investors are looking for, while investors saw opportunities on offer, Luxon said.
The government has launched a number of projects and public-private partnerships, “including a major new expressway,” the Northland Expressway, Bishop said.
An important message to get across was that investment opportunities are not just for the near term, but there is a medium and long-term pipeline of opportunities in New Zealand, including in the healthcare, education and justice-related sectors such as corrections facilities. “If you’re going to set up shop in New Zealand, you want to make sure it is a long-term project,” Bishop said. Investors also wanted to know that there was political stability and certainty around the investment opportunities — something Luxon’s team showcased by including the political opposition in the agenda.
Investor presence
Among the attendees was New Zealand’s own sovereign wealth fund, the NZ$76.7 billion New Zealand Super Fund.
Jo Townsend, CEO of the Guardians of New Zealand Superannuation, said that by bringing together investors, construction companies, iwi (Maori people), government and officials, the summit “can spark conversations and surface opportunities that might otherwise never come about.”
NZ Super invests more than 10% of its assets in New Zealand, but is “not currently heavily invested in domestic infrastructure — so we were interested in hearing more about the pipeline opportunities and connecting with potential partners,” she told P&I by email.
NZ Super, which is one of two funds run by the Guardians alongside venture capital fund Elevate NZ Venture Fund, is interested in domestic infrastructure “because it has the potential to offer the kind of scale we need for an investment to make a meaningful contribution to fund performance,” she added. NZ Super’s assets grew by 17.2% over the fiscal year ended June 30, with a 14.9% investment return.
The fund, which had a 5% allocation to infrastructure as of June 30, is “a sought-after investment partner for both domestic and global investors,” Townsend said. It likes to partner with aligned investors that bring not only capital, “but sector-specific capability and a shared commitment to sustainable finance to New Zealand,” she added. One example of that is a feasibility study that the sovereign wealth fund launched in 2022 with Copenhagen Infrastructure Partners to look into whether an offshore wind industry could be established in New Zealand, Townsend said.
Michael Hannibal, partner at Copenhagen Infrastructure Partners, also attended the summit, a spokesperson for CIP said, also highlighting the exploration partnership with NZ Super.
Other attendees at the summit included the C$38.8 billion ($27 billon) OMERS Infrastructure, the infrastructure investment adviser and manager of the C$133.8 billion Ontario Municipal Employees Retirement System, Toronto. A spokesperson confirmed OMERS Infrastructure’s presence.
Sources said a number of sovereign wealth funds from across the globe were also in attendance. Spokespeople did not respond to requests for comment.
Asset managers in attendance included Brookfield Asset Management (a spokesperson declined to provide any further details on the $1 trillion alternatives manager’s involvement), infrastructure firm Morrison, Igneo Infrastructure Partners and aberdeen.
Although New Zealand was a first-mover in terms of privatizing infrastructure — alongside the U.K. — the market slowed down post-'90s while other countries attracted private infrastructure investment, said Paul Newfield, CEO at $28 billion infrastructure manager Morrison.
The summit “is a bit of a chance for us to take those global relationships and global knowledge back home, as the government is really trying to significantly increase the New Zealand infrastructure pipeline,” he said.
Alongside the big infrastructure deficit is the fact that New Zealand “has relatively shallow capital markets,” particularly in comparison to its closest neighbor, Australia, which has an almost $3 trillion superannuation fund industry and a typical 10% to 15% allocation to unlisted infrastructure, he said.
What Luxon and his cabinet is trying to achieve is to “get New Zealand on the map of global institutions and say, ‘there’s not just… an individual deal, but here’s a multidecade pipeline of opportunity that makes it worth people’s while to spend time in New Zealand,” Newfield said. Even for Australia-based investors, a trip to New Zealand eats up around three to four hours on a plane.
In terms of the opportunities and pipeline, there are probably three or four projects that could be brought to market in the coming 18 months, he added — the biggest and most ready of which is the Northland Expressway, Newfield said. That 100 kilometer road will connect Auckland with the northern parts of the island via one motorway.
He said one overseas sovereign wealth fund remarked on how aligned the message was, that the Prime Minister was present, and that there was a “real sense that the country is open for business.”
In terms of the opportunity for global investors, Newfield was clear that there are “not going to be a lot of megacap deals in New Zealand. So if you’re a megacap infrastructure fund manager, it’s less exciting.”
But there is a “sweet spot” in the midmarket area, investing a “few hundred-million U.S. dollars of equity.” That segment of the market isn’t getting a lot of attention, he said, while small tickets probably get impact-based or local investment.
Two members of asset manager aberdeen’s concession infrastructure team, which invests in social, economic and government infrastructure projects, attended the summit. Bill Haughey, a partner who attended, said the $463 billion firm is “targeting deploying capital into infrastructure in New Zealand in the near future. We see the pipeline of projects across different sectors and approach from the New Zealand government as encouraging,” he said in an email.
And Igneo, which managed $20 billion in assets as of Sept. 30, sent one Sydney-based representative to the summit. While the firm’s only Asia-Pacific office is in Sydney, it has “successfully invested in NZ infrastructure for more than 10 years,” a spokesperson said in an email.
“NZ is an attractive investment destination as it has a stable economy and high-quality infrastructure,” with New Zealand-based assets managed from Australia. The firm has about NZ$5 billion of total capital invested in New Zealand.
