The A$22.3 billion ($17 billion) bid for Sydney Airport on Monday confirms a growing theme: the outsize power of Australia’s superannuation, or pension fund, sector.
The bid comes from a consortium that includes IFM Investors, an investment management company owned by 27 not-for-profit Australian super funds; QSuper, a Queensland-based super fund with A$117 billion of assets under management; and US fund Global Infrastructure Management.
Also, its success is contingent upon agreement from another super fund – UniSuper, which today is the biggest shareholder in Sydney Airport with a 15% holding – to reinvest its equity for an equivalent stake in the consortium’s holding vehicle, if successful.
The Australian super sector was worth A$3.1 trillion as of March 31, according to the Australian Prudential Regulation Authority, making it one of the largest institutional asset pools in the world. Its scale is out of step with the economy – double the national GDP, for example, and well over the A$2.44 trillion entire market capitalization of the ASX – and it has long been a challenge for the larger funds to invest their assets.
The drivers
Consequently, super funds, and in particular not-for-profit funds known as industry funds, have been forerunners in illiquid areas like infrastructure.
