Image source: Monash BypassThe Future Fund and QIC today announced they had reached financial close for an interest in the EastLink toll road network sold by New Zealand Superannuation Fund and Teachers Insurance and Annuity Association of America, advised by its investment advisor Nuveen.
The transaction comprises a 19.8% interest in Connect East Group, owner of the largest toll road network in Victoria with a 39km toll road (EastLink) and a 1km bypass (Ringwood Bypass).
EastLink is the only major north-south transport artery in Melbourne’s east, connecting the Eastern, Monash, Peninsula Link and Frankston freeways. An average 250,000 vehicles, including 50,000 commercial vehicles use the toll road daily.
The Future Fund, Australia’s sovereign wealth fund, has a long track record of direct investment in Australian infrastructure, including significant interests in some of Australia’s largest transport assets.
The Fund takes an active role in the governance of these investments, with a view to being an effective long-term steward of capital.
QIC has a long-established relationship with Future Fund and will manage this investment on their behalf, leveraging its long-held experience in the transport sector.
Ross Israel, Head of Global Infrastructure, QIC said this investment is another demonstration of our commitment to the transport sector, a key focus area in our sector centric, thematic based investment strategy which also includes Energy and Utilities, and Social and Healthcare infrastructure.
“QIC Infrastructure has a long track record in the transport sector including across toll roads, airports, ports and maritime freight. We will leverage this experience in managing investments in Queensland Motorway Limited, which QIC held for four years and divested in 2014 and NorthWestern Roads Group, to responsibly manage EastLink on behalf of the Future Fund,” he said.
“This latest investment increases QIC’s Infrastructure’s transport sector investments under management globally to A$13.2 billion.”
Mr Ben Samild, Chief Investment Officer for the Future Fund said this is the Future Fund’s first direct investment in an Australian toll road and is in line with our strategy to seek more Australian dollar exposures.
“Infrastructure assets such as EastLink provide reliable long-term returns and help to protect the portfolio from sustained higher inflation and interest rates,” Mr Samild said.
“The Future Fund has a long track record of investing in Australian infrastructure, with more than A$11billion held in assets including Melbourne Airport, Perth Airport, Port of Melbourne, Canberra Data Centres, Amplitel, OneFortyOne Plantations and Tilt Renewables.
James Fraser-Smith, Director Infrastructure and Timberland for Future Fund said they were very pleased to have secured an investment in this high-quality Victorian transport asset.
“Eastlink is a mature toll road and a key part of Melbourne’s road network, providing mobility in a high-use corridor,” Mr Fraser-Smith said.
“This investment is a valuable addition to the Future Fund’s infrastructure holdings and will help us deliver our investment mandate. We look forward to working constructively with the other shareholders and management to deliver long-term, sustainable outcomes for our stakeholders.”
Nicola Palmer, Partner, Head of Transport Origination, QIC said QIC’s deep industry experience and proud history of working alongside key stakeholders to bring forward the development of public infrastructure, were important elements in partnering with Future Fund and securing this deal.
“Our significant Australian infrastructure footprint, deep sector knowledge and relationships, and local on the ground presence, coupled with our thematic sector centric approach position us well and enable us to identify opportunities and proactively unlock them quickly,” Ms Palmer said.
“We are looking forward to applying our international expertise and track record in Australian roads infrastructure to Horizon Roads together with the Future Fund and alongside Horizon Roads management and existing investors.”
QIC Infrastructure’s other transport infrastructure investments include NorthWestern Roads Group (Westlink M7 and NorthConnex), Port of Melbourne and Port of Brisbane . QIC is also currently assisting the Queensland government in developing a feasibility study for the Gympie Road Bypass Tunnel.
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QIC is a long-term specialist manager in alternatives offering infrastructure, real estate, private capital, private debt, natural capital, liquid strategies and multi-asset investments. It is one of the largest institutional investment managers in Australia, with A$111bn (US$72bn) in funds under management. QIC has over 900 employees and serves approximately 115 clients. Headquartered in Brisbane, Australia, QIC also has offices in Sydney, Melbourne, New York, San Francisco and London. For more information, please visit: www.qic.com. (as at 31 March 2024)
QIC is a long-term infrastructure investor with an established international platform, an active management approach and a proven 17-year track record. With an international team of 84 professionals across five offices, QIC Infrastructure manages A$33.9bn (US$22.1bn) across 22 international direct investments and has realised in excess of A$15.2bn back to its clients. In the Australasian market, QIC manages a portfolio in excess of A$25 billion across 16 direct assets, with investments with operations in all States and territories.
The Future Fund is Australia’s Sovereign Wealth Fund, investing for the benefit of future generations of Australians. The Future Fund is the Commonwealth Government’s largest financial asset and bolsters the country’s credit rating. The Future Fund’s investment mandate is to achieve an average annual return of at least CPI +4% to 5% per annum over the long term, with an acceptable but not excessive level of risk. As at 31 March 2024, Future Fund had total assets under management of over $223bn, with a global infrastructure portfolio in excess of $20bn. The Fund has a strong track record of supporting its assets and management teams, through good governance, active engagement on strategic initiatives and a long-term focus on sustainability.