Cbus drives ahead with strategic US infrastructure investment
21 January 2016
Cbus has invested over A$140 million in a strategic transportation asset within the USA, the Indiana Toll Road (ITR), a 252 km highway that serves as a critical part of the Midwest and Northeast transportation network in the US between Chicago and Ohio.
The investment by Cbus is alongside IFM Investors Global Infrastructure Fund, which purchased the ITR in May 2015.
The ITR has a significant operating history and is the only multi-lane, non-stop route between Chicago (largest rail hub in the US) and freight destinations in the US Midwest and east coast cities.
Toll road assets like the ITR match the long term investment horizon for Cbus and other superannuation funds as they generate steady income streams over many years that increase in line with inflation.
Kristian Fok, Executive Manager, Investment Strategy at Cbus Super, sees great potential for infrastructure co-investments such as the ITR as the Fund increases in size.
“Infrastructure is one of the few unlisted asset classes that has the capacity to scale well with the Fund’s asset growth. To support the Fund’s activities in co-investments, we are expanding our internal resources including hiring a specialist infrastructure manager” said Mr Fok.
Infrastructure co-investments provide an opportunity to lower fees and increase influence over the composition of the Fund’s portfolio. For example, co-investments provide flexibility to add more capital and strategically re-weight asset exposures alongside pooled fund exposures in order to optimize portfolio composition.
Grant Harrison, Investment Manager, Private Markets at Cbus Super, sees the ITR co investment as an attractive fit within the Fund’s infrastructure portfolio.
“The ITR co-investment balances the Fund’s exposure to domestic and international infrastructure assets and increases our exposure to toll roads. The addition of this asset also enhances portfolio diversification and is expected to be a stable, long term investment for Cbus” said Mr Harrison.
The ITR co-investment is the second largest infrastructure exposure for Cbus Super after NSW Ports — Port Botany and Port Kembla.