Unlisted infrastructure expands to retail markets

Unlisted infrastructure, which has only been available to larger institutional investors is now becoming available to smaller investors and self-managed superannuation funds (SMSFs).

Unlisted infrastructure typically included airports, seaports, toll roads, and electricity transmission and distribution networks.

Nicole Connolly, Infrastructure Partners Investment Fund (IPIF) chief executive, said unlisted infrastructure had typically been the domain of large industry funds, until now.

“Typically, it hasn’t been available to investors unless you’ve got a minimum of, for example, $5 million or in some cases up to $25 million to invest,” Connolly said.

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“That rules out a huge part of the market including the $760 billion SMSF market.”

Jonathan van Rooyan, IPIF chief investment officer, said the aim was provide a bridge between the best performing unlisted infrastructure assets and smaller investors.

“Australian industry funds have on average 5% to 20% allocation to unlisted infrastructure, the future fund has 7% allocated, Australian Super around 12%,” van Rooyan said.

“If you think about the performance of industry funds versus retail, one of the big debates is why did industry funds outperform on some measures and it’s in part due to unlisted asset exposures such as infrastructure.”

van Rooyan said unlisted infrastructure offered stable cash yield in a low interest rate environment and the capital value was stable.

“The best performing Australian super funds had large exposures to unlisted infrastructure, which has historically delivered bond-like volatility and equity-like returns through multiple economic cycles,” van Rooyan said.