Challenger to launch global infrastructure fund

Challenger is launching a global infrastructure fund designed for platforms next month.

The fund will invest in listed and unlisted assets such as airports, power transmission companies, schools and hospitals.

Challenger head of infrastructure Steve Bickerton said the company had listened to investors, who said they wanted an unlisted investment vehicle.

“Our investment philosophy for the fund will be to aim for high quality infrastructure assets that will deliver value,” he said.

“The research process for identifying these assets will be through looking at global themes and opportunities.”

It is expected about 55 per cent of the fund will be in listed infrastructure assets, 40 per cent in unlisted investments and 5 per cent in cash.

Bickerton said by researching both listed and unlisted assets, they are able to generate investment opportunities in each through a good cross-flow of information.

“Liquidity in the fund will be facilitated through listed infrastructure investments rather than large exposure to cash,” he said.

“We are looking to generate a reliable income stream for investors for long-term capital growth.”

The fund will use the UBSA Bank Bill index as a benchmark and try to outperform it by 3 per cent a year.

As the product disclosure statement (PDS) has not been issued as yet, details about minimum investment and management expense ratios (MERs) are not available.

The new fund follows on from Challenger’s listed infrastructure fund that was launched in August last year and initially raised $630 million. The fund subsequently raised an additional $210 million in a rights issue to fund the acquisition of UK gas transporter Inexus.

Bickerton said Australia is fast becoming a global player in the infrastructure market and a world leader in creating managed funds in this sector.

“Companies such as Challenger and Macquarie are exporting our expertise in infrastructure managed funds around the world,” he said.

“However, we are still a small player with 2 per cent of the global listed infrastructure market.”

Globally, the listed infrastructure investment market is worth $1.8 trillion and Australia has $45 billion of those assets.

Bickerton expects Australia’s slice of the global market to grow in the future.

“We are seeing the creation of a new asset class in investment markets and the new global fund is the next step to Challenger being recognised as a major player in that space.”