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Mercer eyes private infrastructure
Mercer has significantly increased its private infrastructure holdings in the past six months, saying the time is right to take advantage of indebted governments’ reliance on private sector investments.
The asset class also provides a useful hedge against both volatility and inflation, which is important in the current market conditions, according to Mercer’s chief investment officer and leader of its portfolio construction team in Asia Pacific, Russell Clarke.
Although Australia is an exception, the governments of many developed markets are highly indebted and will increasingly be looking to the private sector to become more involved in the provision of public infrastructure, he said.
In the coming years we will get access to a variety of more interesting assets that we may not have got exposure to historically, allowing investors to step up in bridging the capital shortage, he said.
And although our Federal Government is in a better position many state governments may be making more infrastructure assets available as they are keen to maintain their credit ratings, he said.
Mercer has significantly boosted its exposure to the asset class over the past six months, acquiring stakes in German gas transmission utility Thyssengas and Czech transmission towers business Ceske Radiokomunikace through underlying manager Macquarie Specialised Asset Management.
Mercer also seeded Westbourne Capital in December to provide exposure to a range of investments, such as the port assets of the Newcastle Coal Infrastructure Group, Mercer stated.
“The winners in today’s infrastructure market will be investors who pay sensible prices based on realistic assumptions for future growth and inflation, at appropriate discount rates,” Clarke said.
“Those who can strike the optimal capital structure for an asset and have a superior ability to manage it effectively once acquired will be successful investors.”
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