Australian infrastructure a good investment fit for Gulf sovereign wealth funds

16 Oct 2013

The stable, long-term returns offered by Australia’s major infrastructure projects are a good match for the Gulf Cooperation Council’s (GCC) sovereign wealth funds, according to the Australian Trade and Investment Commission (Austrade).

“The recent success by a consortium, including a Gulf sovereign wealth fund, in a A$5 billion joint bid in New South Wales is further evidence of mounting interest in Australia’s major infrastructure landscape,” said Gerard Seeber, Austrade’s Consul General and Senior Trade Commissioner in Dubai.

“Interest is strong among significant investors from the Gulf who, alongside Canada, are considered Australia’s key markets for infrastructure financing,” Mr Seeber added.

GCC sovereign wealth funds are valued at US$1.6 trillion and growing, making up one-third of global assets held by sovereign wealth funds.

“Gulf investors have been very active globally in securities, real estate and, increasingly, in infrastructure,” Mr Seeber said.

Among GCC sovereign wealth funds, the most active so far in Australia’s infrastructure sector is the Abu Dhabi Investment Authority, a partner in the NSW Ports consortium which won the 99-year lease for Port Botany and Port Kembla with its A$5.07 billion bid.

“While interest generated in the Gulf by the recent NSW ports deal bodes well for future announcements, the key to greater participation lies in their ability to find suitable co-investors and club deals for these major projects,” Mr Seeber said.

He added that GCC sovereign wealth funds have recently invested in major infrastructure projects and companies in the UK, Germany and Russia, signalling a need for Australia’s investment case to be even stronger.

“The differentiator for Australia, in attracting capital away from other emerging investment destinations for these funds across Asia, Africa and Latin America, will be for the Commonwealth and State governments to maintain a robust business and regulatory environment, and to play a more active role in facilitating partnerships,” Mr Seeber said.

Australia’s pipeline of publically available infrastructure projects, dedicated Government agencies and focussed industry body have been well-received by the global market, he said. However, Australia must step up its engagement at the most senior levels.

“This remains the cornerstone of Austrade’s investment-attraction strategy in the GCC,” he said.