One of Australia's largest superannuation funds could be venturing offshore amid a relative scarcity of assets in its domestic market, delegates heard today at Infrastructure Investor's inaugural Australia Forum, in Melbourne.
UniSuper, the country's superannuation fund dedicated to education and research sector staff, has traditionally favoured significant stakes in infrastructure assets closer to home. It is a shareholder in the likes of Adelaide and Brisbane airports, Victoria's desalination plant and Sydney's Airport Motorway.
The rationale for retaining a large exposure to the Australian market remains strong, said Nick Chapman, a senior investment analyst at Unisuper.
“About 40 percent of our fund is open defined-benefit. The imperative of liability matching means inflation linkage is very strong,” he told the audience while taking part in an investor panel.
“We're a big fish in Australia, but offshore we're just another drop in the sea. You get less pull with managers and companies, so without information that gives you an angle, it's a little bit harder to take those big concentrated positions.”
But with its A$55 billion ($41 billion; €36 billion) under management continuously growing, the fund may soon meet the natural limits of its immediate environment, Chapman said.
“Australia is only so big and there are only so many opportunities here, so at some stage we're probably going to be bumping up against these constraints and we'll have to look offshore. At the moment we're getting away with it, but I wouldn't be surprised if those constraints apply sooner rather than later.”
It wouldn't be the first time the institution shifts strategies to try and expand its pool of opportunities. After a team comprising Morgan Stanley and UniSuper lost to a consortium formed of QIC, Global Infrastructure Partners, IFM Investors and the Abu Dhabi Investment Authority in its bid to buy the 99-year lease of Port of Brisbane in 2010, the fund somewhat “lost its straightjacket” and started investing in listed infrastructure as well, Chapman said.
UniSuper holds shares in Sydney Airport and Transurban Group, which are both listed on the Australian Stock Exchange. Its investments have included commitments to TA Associates XI, Riverside Europe IV and CVC Asia Pacific Fund III.
Infrastructure Investor is a sister title of Private Equity International.