Privatisation of assets prompts overseas pension fund investment

The privatisation of quality public assets in Australia is attracting investment from Canadian pension funds, according to The Trust Company general manager corporate clients, Andrew Cannane.

Cannane said a recent tour of Canada's largest pension funds confirmed their continued interest in investing in Australian infrastructure and property.

Canadian pension funds already had a strong appetite for investing domestically but were now looking for investment opportunities further afield, according to Cannane.

Feedback cited the market's attractive yields, high-quality assets and proximity to Asia as major drawcards to invest in the Australian economy, he said.

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"The rising trend of privatising quality public assets in Australia, such as ports, desalination plants and road and rail infrastructure, makes Australia a compelling investment opportunity for these investors," he said.

A transparent sale process and the high quality of assets for sale were reasons interest would remain high, according to Cannane.

"These funds are looking for stable, cash-flow generating assets that can be held for the long term, with returns that are not highly correlated to share markets," he said.

"Coupled with Australia's reputation as a safe investment haven, its robust regulatory regime, the relative strength of the Australian economy, and the attractive yields of property and infrastructure assets relative to international markets, Australia ticks all the boxes."

According to The Trust Company, investment by Canadian pension funds into Australian infrastructure and property had increased over the last couple of years, with Australia the third largest global destination for Canadian direct investment abroad.

"Canadian direct investment into Australia is approximately $25 billion CAD, making the two-way investment between both countries around $45 CAD," it said.

Last month, the Ontario Teacher's Pension Plan announced it had agreed to acquire a 70 per cent stake in three of Australia's telecommunications companies, and last year the Canada Pension Plan Investment Board agreed to invest $1 billion in the Barangaroo development project in Sydney, according to Austrade.