Challenger to list infrastructure fund

Kerry Packer-backed fund manager Challenger Financial Services will tap into soon-to-be retiring baby boomers’ thirst for yield, by listing its own infrastructure fund on the Australian Stock Exchange (ASX).

A product disclosure statement for the Challenger Infrastructure Fund (CIF) was lodged with the ASX today.

Challenger hopes to attract $630 million to the fund with $315 million - or half of the money - being funded by the Sydney based company’s annuity business, Challenger Life.

About 60 per cent of the remaining $315 million will be offered to retail investors and 40 per cent to institutional investors.

The fund will be run by Challenger Life and will invest in a diverse range of Australian, British, European and North American infrastructure assets.

Already part acquired by the fund are British-based assets Wales and the West Gas Distribution Network, North of England Gas Distribution Network and Arqiva (formally ntl Broadcast). CIF general manager Steve Bickerton said the two gas infrastructure assets were worth over 1 billion pounds and serviced at least 6 million Britons.

The North of England gas distribution network was bought into through a consortium led by Chinese retail giant Cheung Kong Infrastructure Holdings. The other two were bought in an alliance with Macquarie Bank.

The public will have to pay $1.75 for one of the 90 million units put on offer, following by a second payment of another $1.75, payable 12 months after listing.

The fund will only be capped to $630 million for the initial 12 month raising period, after which Challenger Life’s 50 per cent interest will gradually be diluted.

Bickerton said the average yield of the fund’s pre-existing assets was 9.25 per cent.

He said Challenger’s decision to invest in infrastructure would help offset its long-term annuity liabilities and that it would be possible that they would again team up with Macquarie Bank to seek out additional infrastructure assets for the fund.