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Super funds seek to capitalise on digital infrastructure trend
The appetite for digital infrastructure has grown significantly among Australia’s superannuation funds, with assets like data centres, fibre optic networks, and telecommunications now viewed as strategic investments in their portfolios.
Joshua Lowen, insights manager at SuperRatings, highlighted the growing appeal of digital infrastructure for superannuation funds, saying that it is unlikely to diminish anytime soon.
“Like other infrastructure assets, they provide benefits around diversification and are well suited to superannuation investments with a long-term investment horizon,” he told Super Review.
Lowen said that the key driver for super funds’ strong interest in assets like data centres, fibre optic networks, and telecommunications is their significant growth potential.
“These assets are the ‘picks and shovels’ of the recent advancements in AI technology and will be crucial in supporting widespread adoption of the technology. There is also a trend towards web-based services and storage as being both more convenient and more secure for businesses as cyber security continues to grow in importance,” he said.
“As such, demand for these assets is likely to increase and remain high.”
Lowen’s comments come as Australian super funds ramp up their investments in digital infrastructure.
Namely, this week, Australia’s largest super fund announced its first investment in the US data centre market with a $2.2 billion investment in US company DataBank alongside existing investor, DigitalBridge.
It marks the fund’s second such investment in this space with DigitalBridge following a $2.5 billion deal to acquire a significant minority stake in Vantage Data Centers Europe, Middle East, and Africa (Vantage EMEA) in 2023.
Announcing the investment, AustralianSuper’s head of mid-risk portfolios, Jason Peasley, flagged conviction that this sector “will help deliver sustainable, long-term performance” for the fund’s more than 3.4 million members.
He also said DataBank continues to capitalise “on the unprecedented demand” for cloud and artificial intelligence infrastructure.
In August, Aware Super, another major fund, announced a substantial investment in this space by acquiring a minority stake in euNetworks, a London-based leader in bandwidth and data centre connectivity.
The investment was part of a €2.1 billion equity recapitalisation through a vehicle led by global infrastructure and real assets manager Stonepeak, with Mercer and Aware Super as key anchors, alongside direct investments from the Investment Management Corporation of Ontario and APG Asset Management.
Like Lowen, Chant West’s senior investment research manager, Mano Mohankumar, told Super Review there is a trend to be observed in this space, with super funds increasingly diversifying their infrastructure exposures by investing in more emerging sectors like digital infrastructure and the energy transition.
“As you know the digital infra sector is benefiting from significant tailwinds. The advancements and growth in AI, which has driven much of the growth of major tech companies over the past couple of years, has resulted in the need to build more data centres to support data storage,” he told Super Review.
Current estimates suggest over 350 million terabytes of data are created every day, with these figures only poised to tick up over the medium term.
“Combine this with the amount of incremental storage required for AI and it is clear where the tailwinds are coming from,” Kyle Mangini, global head of infrastructure at IFM Investors, told Super Review.
IFM Investors holds over $110.2 billion in infrastructure equity funds under management and 42 assets across 20 countries. These include data centre operator Switch Inc in the US, British telecommunications company Arqiva, and fibre roll-out company GlasfaserPlus in Germany.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
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