The infrastructure asset class in the Asia-Pacific region excluding Australia is attracting growing interest from institutional investors as a less crowded market offering yields superior to core brownfield developed-country assets they've focused on in recent decades.
As a function of Asia's less mature infrastructure market, "we're seeing less direct competition for assets in this part of the world," said Neil Johnson, Hong Kong-based managing director and head of China for Macquarie Asset Management's infrastructure arm, Macquarie Infrastructure and Real Assets Inc.
"We're able to achieve slightly better pricing power as a result," he said.
MIRA managed roughly A$178 billion ($123 billion) in infrastructure assets in public and private funds, co-investments, partnerships and separately managed accounts as of Sept. 30.
"Valuations across the globe are high but we are finding … a little bit more opportunity in Asia in the beta space than we are in the U.S.," agreed Kevin Bong, deputy director, economics and investment strategy, with Singapore sovereign wealth fund GIC Pte. Ltd., in a panel discussion May 6 at the Investment Management Association of Singapore's annual conference.
GIC, which admits to assets of more than $100 billion, roughly a quarter of analysts' estimates, invests in infrastructure both directly and through funds.
Even as Macquarie has had to move beyond certain traditional infrastructure segments to maintain returns on assets in developed markets, "we're still able to generate the target level of returns we require in a number of the more traditional sectors in Asia," said Mr. Johnson.
Recent examples include the 31.7% stake a MIRA-led consortium acquired in Philippine geothermal power producer Energy Development Corp. for about $1.3 billion in October 2017 and its $1.5 billion purchase of nine toll road projects from the National Highways Authority of India in March 2018.
"This is an exciting time to be in the Asia-Pacific region," due in part to the diversification benefits to be gained here for Caisse de Depot et Placement du Quebec's global infrastructure portfolio, said Cyril Cabanes, Singapore-based managing director and head of infrastructure investments, Asia-Pacific, for the C$309.5 billion ($230.2 billion) Montreal-based manager of Quebec pension and other public assets.
There are currently 18 infrastructure funds focused on Asia, targeting $11.4 billion total in capital, according to Preqin.