Rest awards $427m global PE mandate to QIC

Investments from the mandate awarded by Australia’s superannuation fund Rest to QIC will be mostly in the US, Europe and Asia-Pacific.

Sydney-based superannuation fund Rest has awarded a A$550 million ($427 million; €325 million) private equity mandate to Queensland Investment Corporation, one of the first separate account mandates it has issued for the asset class in almost a decade, Private Equity International understands.

Rest made the commitment to QIC’s Global Private Capital division after “lengthy discussions between QIC and Rest on creating a private equity programme fit for the superannuation fund’s diversification, return and risk management profile,” Damien Frawley, QIC’s chief executive said in a statement.

“That would be one of the first such mandates that has been awarded in a number of years in Australia,” Marcus Simpson, head of global private capital at QIC, told PEI. “Rest will get access to a number of great relationships we have held for a number of years, co-investments, as well as co-underwriting alongside global managers.”

He noted that the firm has already started investing Rest’s commitment, and will focus mostly on investments in the US, Europe and Asia-Pacific.

Australian superannuation funds have in recent years been reducing their GP relationships and focusing more on making direct investments as high valuations and closer scrutiny on fees become more common the market.

The expanded push into private equity investing comes amid Rest’s continued drive to diversify its portfolio. Rest decreased its exposure in overseas and Australia shares in the 2016-17 financial year, and boosted its alternatives exposure. According to its 2017 annual report, the allocation to overseas shares fell from 29 percent in FY 2015-16 to 23 percent last year, while Australia shares dropped from 19 percent to 17 percent. Meanwhile, Rest’s allocation to alternative assets rose from 13 percent to 19 percent during the same period.

Simpson noted that as Australia’s superannuation pool continues to grow, QIC expects increasing appetite from Australian institutional investors in private equity.

Rest is one of Australia’s largest funds by membership, with around two million members and A$50 billion in funds under management as at 31 December 2017. Rest was rebranded earlier this month to reflect the fund’s “transformation, strategic direction and strong customer focus”, it said in a statement. It was previously named the Retail Employees Superannuation Trust (REST) Industry Super.

This is not the first time Rest has committed capital to QIC. The investor has been a longstanding investor in the A$4.5 billion QIC Shopping Centre Fund.

The Brisbane-headquartered QIC manages approximately A$81.7 billion of assets on behalf of 110 institutional investors in Australia and globally.