Aurex Insights: Australia Infrastructure Investment Manajement

February 2020

Australia Infrastructure Investment Management
Market Review

Welcome to Aurex Group’s inaugural Infrastructure Investment Management market review for Australia. Last year saw the expansion of our specialist Infrastructure & Energy search practice to Australia with the appointment of Rory Callow, Principal Consultant in Sydney. Now well positioned to provide an in-depth look at the market, we are bringing our insight into the trends, moves and factors shaping this exciting sector moving forward.

2019 - A Year of Growth

The last twelve months have delivered a substantial period of growth across the Infrastructure Investment Management industry in Australia. This was driven in part by overseas investors expanding their presence on the ground in Sydney and Melbourne to seek double-digit returns across traditional value-add infrastructure. We also saw growth in the direct deployment of superannuation funds, squeezing the returns across the core infrastructure investment landscape, making it a highly competitive asset class. With localisation happening across the core space, there was very little room for additional overseas capital.

 

Waste-to-energy (WtE) has been a major focus and topic of discussion over the last year with the Kwinana and East Rockingham projects reaching the construction phase in 2019. The infancy of this market and lack of local expertise has seen an inPux of foreign WtE professionals to Australia to lead on the delivery and financing of these projects. A push from experienced European construction businesses has also monopolised this sector.

 

There has been some growth from the value-add infrastructure investors seeking double-digit returns

Acciona, East Rockingham Resource Recovery Facility, Hitachi, New Energy Corporation, WtE

through active management and targeting infrastructure service businesses that still show decent downside protection risk. However, the industry is still dominated by the volume of greenfield and public-private partnership (PPP) opportunities.

Mounting Pressure on Australian Infrastructure

Like many developed nations, Australia is facing new challenges in terms of technology distribution, population growth and urbanisation, putting pressure on the pace at which infrastructure design, construction and development are moving. The country will need to lean on its leading infrastructure planning, delivery and financing abilities to meet this growing demand for domestic infrastructure.

 

The good news is that Australia is a global leader in the financing and delivery of major, large-scale public infrastructure. Founded on three decades of innovative practices, the ability of Australia’s private and public sectors to collaborate and deliver social infrastructure, transport and utility projects domestically is well established.

Impacting Infrastructure Demand:

  • Technology-led disruptions around the future of mobility
  • Clear need to reassess traditional commercial models
  • Stagnating productivity
  • Skill shortages
  • Impacts of major concurrent projects on city residents and communities

Population Expansion Fuels Action

Melbourne city population growth is set to expand at 2.5% annually

The forecasts for Australia’s population growth estimate there to be approximately 40 million inhabitants by 2050. To ease the inevitable impact on domestic infrastructure,

the government is currently upscaling its commitment to deployment across social infrastructure, transport and utilities at an aggressive rate.

It is estimated that aggregate investment in projects greater than AU$50 million will be AU$77 billion this year, a 200% increase from 2016. This rise aims to support the population growth of major cities like Sydney and Melbourne, which are expanding at almost 2% and 2.5% annually, creating a potential gap in infrastructure. The shortfall is estimated to be almost 1% of GDP at the moment.

Given the superannuation funds introduction of compulsory engagements, Australia also has naturally become a frontrunner in private infrastructure investment. With a spend of almost AU$1,350 per capita on transport in 2019, Australia ranks second in terms of infrastructure spending across OECD countries.

Infrastructure, therefore, is a significant contributor to the economy – from jobs to exports and tourism.

 

 

References:

McKinsey & Company. (2019). Capital Projects and Infrastructure – Australia’s Infrastructure Innovation Imperative.

Opportunities for Candidates

While Australia has proven its strength in infrastructure deployment, the future challenges the country is facing will require significant collaboration across the industry to ensure targets are met. The requirement for professionals and talent across all arms of the Infrastructure sector will be in high demand as companies, investors and the government scale-up their activity.

Key Infrastructure Projects

Infrastructure Australia has identified AU$55 billion worth of projects on its national priority list over the next 15 years.

Queensland

  • Brisbane Metro Inner-City Public Transport Network (AU$730m).
  • Gold Coast M1 Pacific Motorway Upgrade (AU$197.5m).

New South Wales

  • Sydney Metro – 31 Metro Stations, 66km Rail Line in three stages: North-west 2019; City and South-west 2024; Metro West Sydney–Parramatta Investigation (AU$12b).
  • WestConnex Road, Interchange and Tunnel Projects 2015–2024 for Parramatta Road, M5 and North-south Corridors (AU$16.6b).
  • Western Sydney Airport Badgerys Creek Stage 1 Single Runway, capacity 10 million passengers per year ($5.3b). Projected cost over three stages to 2064. (AU$38b).

South Australia

  • Adelaide North-South Corridor (AU$1.4b).
  • Gawler Rail Line Electrification (AU$220m).
  • Joy Baluch Bridge Duplication (AU$160m).

Western Australia

  • Metronet Includes Thornie-Cockleburn Rail Link and Yanchep Rail Extension (AU$1.1b).
  • Tonkin Highway (AU$580.5m).
  • Bunbury Outer Ring Road (AU$560m).
  • Roe Highway (AU$144m).
  • Mitchell Freeway Extension (AU$107.5m).
  • Bindoon Bypass (AU$220m).
  • Myalup-Wellington Water Project to reduce salinity in Wellington Dam, the state’s second-largest reservoir (AU$396m).

Australia Capital Territory

  • Light Rail 12km Link northern Canberra to Gungahlin – Completion 2019 (AU$1.3b–$1.6b).

Victoria

  • North East Link (AU$15.8 b).
  • West Gate Tunnel (AU$6.7b).
  • Melbourne Airport Rail Link. Construction begins 2022. (AU$5b).
  • Metro Trains 65 high-capacity trains for the network. (AU$2.3b)
  • Murray Basin Rail Project Remove capacity constraints, standardise gauge and increase load limits. Forecast to replace 20,000 truck trips from an area that grows 70 per cent of the state’s grain (AU$435m+).

Northern Territory

  • Darwin Regional Water Supply Dams – water supply, distribution, consumption. Completion 2025.
  • Darwin City Deal investment in Education and Civic Precinct (AU$200m).
  • Central Arnhem Highway Upgrade (AU$180m).
  • Buntine Highway Upgrade (AU$100m).

Tasmania

  • Hobart Science and Technology Precinct. Completion 2021 (AU$400m).
  • Bass Highway Upgrade (AU$400m).
  • Bridgewater Bridge Replacement (AU$461m).
  • Tasmanian Rail Freight Revitalisation (AU$60m).
  • Scottsdale Irrigation Scheme (AU$24.5m).

References:

Infrastructure Australia. (2019). Infrastructure Priority List – Australian Infrastructure Plan Project and Initiative Summaries.

Recent Market Moves

Infrastructure Australia has identified AU$55 billion worth of projects on its national priority list over the next 15 years.Given the demand for infrastructure and investment opportunities increasing domestically, we look back on the moves over the last year to see who has been growing their origination and execution capabilities to meet capital deployment demands.

Equity/Debt/PPP/Greenfield – Infrastructure Investors

  • Michael Thompson left IFM Investors and joined AMP Capital, in Melbourne, as Director.
  • Katherine Todd left Challenger Limited and joined AMP Capital, in Sydney, as Director of Strategy.
  • Daniel Walters left Morgan Stanley and joined AustralianSuper, in Melbourne, as Senior Investment Director, Infrastructure.
  • Andrew Jennings left QIC and joined KKR & Co. Inc., in Sydney, as Director.
  • Mark McArdle left QIC and joined H.R.L. Morrison & Co, in Sydney, as Investment Director.
  • Lorah Zhao, ex Prostar Capital, has joined Macquarie Infrastructure & Real Assets as an Executive.
  • Brian Phan, ex RBC Capital Markets, has joined Infrastructure Capital Group as Associate.
  • Grace Harnwell, ex Macquarie, has joined Cbus’ Infrastructure Investment team as an Investment Associate in Melbourne.
  • Diana Callebaut left CBUS Super Fund and joined TCorp, in Sydney, a head of Infrastructure Investment.
  • Jasmin Jenkins left Macquarie Group and joined Clean Energy Finance Corporation, in Sydney, as Director.
  • Charles Fung left Planum Partners and joined DIF Capital Partners, in Sydney, as Associate Director.
  • Karen Wells left Port of Brisbane and joined Warada Capital, in Sydney, as Executive Director.
  • Karen Wells left Intergen Property Group and joined Warada Capital, in Sydney, as COO.
  • Damien Ng left ANZ and joined Brookfield Asset Management to launch Infrastructure Mezz debt, in Sydney, as Senior Vice President.
  • Nicole Miller left EY and  joined  Infrastructure Capital Group, in Melbourne, as Investment Associate.
  • May Yewdall left First State Investments and joined HRL Morrison & Co, in Australia, as Investment Manager.
  • Andrew Kosasih left Deutsche Bank and joined Macquarie Group, in Sydney, as Senior Manager.
  • Antonio Calabrese left KPMG Australia and joined ICAM Funds, in Adelaide, as Head of Infrastructure Portfolio Management.
  • Melannie Pyzik, ex QIC, has joined Argo Infrastructure Partners as a Managing Director.
  • Kim Nguyen, ex Hastings, has joined Foresight Group as Head of Australia.
  • Richard Strang, previously at PWC Brisbane, has joined AustralianSuper as an Investment Analyst in Melbourne.
  • Stuart Bousfield left KPMG Australia and joined PGGM Investments, in Sydney, as Investment Manager.
  • Melannie Pyzik left QIC and joined Argo Infrastructure Partners, in Sydney, as Managing Director.
  • Steven Hong left Global Infrastructure Hub and joined Castalia, in Sydney, as Director.
  • Iain Wood from the Clean Energy Finance Corporation joins Warada Capital on a secondment, in Sydney, as Associate Director.

M&A/Project Finance/Debt/PPP - Infrastructure Advisors

  • Timothy Foy left RBC Capital Markets and joined Jeueries, in Sydney, as Head of Infrastructure.
  • Jason Date, ex EY, has joined Investec in their Power and Infrastructure Finance team.
  • Emily Mussen left Modano Services Australia and joined Deloitte Australia, in Melbourne, as Director.
  • Timothy Kok left Quentin Ayers and joined National Australia Bank, in Sydney, as Associate Director.
  • Stephen So left IDA Property Group and joined Plenary Group, in Melbourne, as Associate Director.
  • Sub Mukherjee left Commonwealth Bank and joined Westpac Institutional Bank, in Sydney, as Associate Director (Project Finance).
  • Grant Crene, ex NAIF, has started at ING as a Director, Infrastructure Finance Asia Pacific.
  • Sam Struthers, ex Commonwealth Bank, has joined MUFG as Associate, Project Finance.
  • Diana Shmulburd left Efic and joined Natixis Australia Pty Limited, in Sydney, as Executive Director.
  • Surya Raviganesh left Global Infrastructure Partners and joined JPMorgan, in Melbourne, as Vice President.
  • Sandra Prosolupova left Infrastructure and Project Financing Agency and joined John Holland, in Sydney, as Project Finance Manager.
  • Lillee Pang left Liverpool Partners and joined Mizuho, in Sydney, as Associate Director.
  • Eugen Lim left Morgan Stanley and joined UBS Investment Bank, in Melbourne, as Director.
  • Brian Wong left Westpac Institutional Bank and joined Commonwealth Bank, in Sydney, as National Associate Director.
  • Cameron Bailey, ex Capella Capital, has joined Macquarie Capital as Associate, Infrastructure.
  • Rasik Makan left EY and joined Capella, in Sydney, as Analyst.
  • Matthew Roper left NAB and joined Capella, in Melbourne, as Analyst.
  • Errol Schultz, left NAB and joined MUFG, in Sydney, as Director.
  • Shyamal Chand re-joins RBCCM as a Director, Infrastructure.
  • Isami Morris left Performance Designed Products LLC and joined Industrial and Commercial Bank of China, in Sydney, as Head of Project and Infrastructure Finance.
  • Antony Steinberg left Goldman Sachs and joined RBC Capital Markets, in Sydney, as Managing Director.
  • Marcus Loomes left Citi and joined Commonwealth Bank, in Sydney, as Director – Corporate Finance.
  • Ian O’ Keeue left Projects + Infrastructure and joined Infrastructure and Project Financing Agency, in Sydney, as Director.
  • Brian To, ex NSW Treasury, has started at NAB as a Senior Associate in their Project Finance team.
  • Jan Gabrynowicz left Commonwealth Bank and joined SMBC, in Sydney, as First Vice President.
  • Mark Schmaman, ex Clean Energy Finance Corporation, has started at RBC’s Investment Banking Team.
  • Ben Way left Credit Suisse and joined RBC, in Sydney, as Director.
  • Peter Tibballs left EY and joined Bank of China – Australia, in Melbourne, as Executive Director.
  • Shaun Clarimonde Yu left EY and joined Grant Samuel, in Sydney, as Manager.
  • Louis Chu left The Carlyle Group and joined Deutsche Bank, in Sydney, as Vice President.
  • Tina Haung left Plenary Group and joined National Australia Bank, in Sydney, as Associate Director.
  • Luke Hogan, ex PWC, has joined Plenary Group as an Analyst.
  • Will Reeves, ex PWC Senior Consultant, has joined StepStone as an Analyst.
  • David Ranken left MMG and joined Capella, in Melbourne, as Manager.
  • David Roberts left Piperhouse Advisory and joined MUFG, in Sydney, as Deputy Head of Advisory.

Government/Big 4 - Infrastructure Advisory

  • Chris Wade left Infrastructure Association of Queensland and joined Northern Australia Infrastructure Facility, in Cairns City, as Chief Executive Oficer.
  • Matej Vala left Mazars and joined Northern Australia Infrastructure Facility, in Sydney, as Associate Director.
  • Darren Miller, ex CEO of Mojo Energy, has joined ARENA as CEO.
  • Ramsey Yu, ex KPMG, has joined PwC’s Infrastructure & Urban Renewal team.
  • Salima Rhemtulla left Aurecon and joined Ernst & Young, in Melbourne, as Associate Director.
  • Edwin Ho left EFIC and joined Infrastructure & Project Finance Agency, in Sydney, as Director.
  • Catherine Black left Queensland Treasury and joined Infrastructure & Project Finance Agency, in Sydney, as Managing Director.
  • Patrick Leung, ex Santanole Pure Sandalwood, has joined NAIF as an Origination’s Director in Perth.
  • Benjamin Tan left Commonwealth Bank of Australia and joined Northern Australia Infrastructure Facility, in Sydney, as Director.
  • Donna Awad, ex Sydney Water, has joined Department of Premier and Cabinet NSW as Director Infrastructure, Commercial and Economic Group.
  • Romilly Madew, ex CEO of Green Building Council of Australia, has joined Infrastructure Australia as CEO.
  • Malia Chappel left Coronado Curragh Pty Ltd and joined KPMG Australia, in Brisbane, as Associate Director.
  • Ian O’Keefe left Projects & Infrastructure Group and joined Infrastructure & Project Finance Agency, in Sydney, as Director.

APAC Infrastructure & Energy Team

If you are interested in understanding more about the trends and moves presented in this market review or future opportunities across the Infrastructure Investment Management industry, please do not hesitate to connect with our specialist team.

Rory Callow

Principal Consultant

Sally Tremlett

Managing Director – Australia

Jared Lowe

Global Managing Director

Giles Dalton

Managing Director – Singapore

Alex Kerr

Principal Consultant

Amy Marietta

Consultant

HONG KONG

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HOUSTON

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USA

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SYDNEY

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Australia

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