SWF seeks infra co-investors
Morrison & Co, a specialist investment management firm based in New Zealand and Australia, is seeking to raise up to $1 billion for a private equity fund that will seek low-risk infrastructure projects globally.
This represents a new type of business for Morrison, which has $5 billion of capital deployed among a range of listed, unlisted vehicles and direct mandates in infrastructure, property, venture capital, agriculture and developmental capital.
One of its clients is the NZ$17.7 billion ($13.9 billion) New Zealand Superannuation Fund, the country’s sovereign wealth investor. Since 2006, Morrison has managed a long-term discretionary global infrastructure investment mandate. This is conducted primarily through Infratil, Morrison’s closed-end fund, listed dually on the New Zealand and Australian stock exchanges.
Infratil invests mainly in assets classified as ‘growth’, higher-risk, higher-return deals such as direct retailing of electricity. NZSF is keen to diversify its infrastructure exposure into core and core-plus areas, to complete its risk/return profile in the asset class.
Like most institutional investors, NZSF is not allowed to be the majority investor in a given project or asset. Therefore it needs co-investors who are able to handle big projects, with ticket sizes up to $250 million.
Therefore it has asked Morrison to seek potential co-investors from among other institutional investors. This is one reason behind Morrison’s opening a Hong Kong office in 2010 under the leadership of Anthony Muh, executive director and CEO of asset management.
Muh joined the group in 2010 to help it find projects in Asia, to enable Morrison to diversify away from its existing portfolios in Australia/New Zealand, North America and Europe; and to develop new institutional clients, including pension funds and sovereign wealth funds.
Muh, a Taiwan native raised in Wellington, New Zealand, has over 20 years' investment experience. He served as Asia-Pacific CIO at Citigroup Global Asset Management and CIO at Alliance Trust, the largest closed-end fund listed in the UK. In 2009, he attempted to take advantage of the global equity market’s bottom by launching his own closed-end fund but found raising capital too difficult.
Looking for a closed-end structure with a focus on real assets, he gravitated toward Morrison, whose Infratil fund dovetailed with Muh’s own idea of what kind of investments will work in the long run, assuming inflation becomes a growing challenge.
Muh is taking the lead in seeking to raise assets for the private equity fund to co-invest with NZSF. He says he expects first to tap Japanese pension funds, which are also keen to find low-risk, stable yields over the long term.
Japanese pension funds have large allocations to alternatives but mainly to hedge funds, which have often disappointed. Infrastructure is a new frontier for most institutions, in Japan and regionally, but Muh hopes the participation of NZSF should be one source of assurance.
Morrison was founded in 1988, in the wake of the 1987 stock market crash, which hit Australia and New Zealand badly and forced the overleveraged governments to sell many assets, from airports to power plants.