by Paul McBeth
Toll roads, fibre-optic cable networks and airports: those are just some of the chunky investments a new Macquarie Bank fund hopes to digest.
The bank has just opened the doors to retail investors for its new Global Infrastructure Trust, an Australian unit trust that's targeting portfolio returns of at least 15% annually. Sydney-based Mark Ramsey, director of Macquarie Specialised Asset Management, acknowledges that's "a pretty big ask".
However, he said that infrastructure provided some fantastic opportunities, with Macquarie's approach being to get stuck in and actively manage the investment.
"Owning an airport is not just about making sure the planes don't crash; it's more about financing."
Ramsey, in New Zealand recently to promote the fund, said that private sector investment in infrastructure was essential. "Since 1970, public sector investment as a percentage of GDP in OECD countries has fallen, and fallen markedly. We have got to provide the money for it, as it's the backbone around which economies grow."
But he admits it hasn't all been roses for Macquarie, with the group getting burned along with others over electricity investment in Victoria.
"We no longer think of infrastructure as something that's there a long time and costs a lot. It's patronage-related and demographic-related."
The Global Infrastructure Trust will be actively managed and focussed on OECD countries, investing 75 per cent of its assets outside Australia. It won't suit everyone: the minimum investment is $A20,000 and it's a 10-year, illiquid, closed-end fund with most gains expected from realised gains at the end of that period.
The trust will invest in the unlisted, wholesale Macquarie Global Investment Fund, which was launched in January and aims to raise $A300 million (about a third of that from retail investors). It will close to investors on April 30, or earlier if it fills up.
The bank already has $A5 billion worth of infrastructure assets around the world including those held in the Macquarie Infrastructure Group, a listed company with a $A2.2 billion market capitalisation.
Seed investments for the new fund so far include 100 per cent of the company tolling the American side of the Detroit/Windsor tunnel, the second biggest toll tunnel in the USA, and interests in a couple of Australian fibre-optic cable and bandwidth ventures.
"Toll roads are great," said Ramsey, "and they're one of the reasons we love infrastructure. Once you are in there and owning it, you tend to get opportunities that don't come up anywhere else because you own a great big semi-monopoly and you've got power to do deals with governments."
Paul is a staff writer for Good Returns based in Wellington.
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