Australian-domiciled investment vehicle The Infrastructure Fund (TIF) has acquired its first European asset – a 7.5% stake in Porterbrook Rail Finance, one of the three major UK rolling stock leasing companies.
The move is part of the broader investment strategy for TIF, overseen by trustee The Private Capital Group (TPCG), to create a diverse portfolio of Australian and international infrastructure assets that provide consistent returns to investors.
TIF joined with Utilities Trust Australia and a mandate client to form a 30% equity bloc managed by Hastings Funds Management. Hastings formed a consortium with Allianz Capital Partners and Alberta Investment Management Corporation and EDF Invest to purchase Porterbrook.
Porterbrook owns and manages about 5,900 passenger and freight rolling stock, which represents about a third of Britain’s passenger rolling stock fleet. It leases this stock to train and freight operating companies in the UK under long-term lease agreements.
The Hastings team demonstrated to the board of TPCG the opportunity for growth with this acquisition, the company said in a statement. When looking at this rail opportunity historically, the strong population growth coupled with the economic growth in the UK has led to sustainable passenger volumes growing by 4% annually since 1994 when Porterbrook was first privatized. With continued urbanization, rail passenger demand is expected to increase further, which will drive continued demand for existing and new rolling stock.
TPCG chairman Bob Lette said TIF’s Trustee was attracted to Porterbrook because it was an established, quality infrastructure asset that could deliver a solid rate of return.
“TIF already owns energy and transportation infrastructure assets in the US, but Porterbrook presented the opportunity to secure our first European equity investment. In the process, this allows us to further diversify our portfolio across new sectors and geographies to deliver consistent, above-benchmark investor returns,” he said.
“Initiated by TIF manager Hastings Funds Management, this deal saw like-minded, long-term infrastructure investors with similar strategic approaches unite.”
The Porterbrook purchase comes as TIF targets additional quality infrastructure assets. Earlier this year, TIF and consortium partner China Merchants Group won the A$1.75 billion New South Wales Government auction for the 99 year lease of Port of Newcastle.
TIF is a A$1.6 billion investment fund formed in 1998 by a group of institutional investors as a vehicle for unlisted infrastructure investment. It has returned more than 16% per annum during the past 10 years. TIF has been managed by Hastings Funds Management since July 2000.
TPCG is a wholesale investment house that is governed by and for the interests of its institutional investors. With more than 15 years’ experience, it is the trustee for infrastructure and private equity funds that invest in a diverse range of unlisted assets across Australia and internationally.
TIF comprises a group of industry superannuation funds representing nearly two million members, as well as other institutional investors such as insurance companies, family offices and statutory funds.
The Infrastructure Fund investors include Australian Catholic Super and Retirement Fund, AustSafe Super, BUSS(Q) Building Super, Club Super, Energy Super, Meat Industry Employees' Superannuation Fund, Mercy Super, Military Mutual Aid Association of Korea, Motor Accident Insurance Board (Tas), QIEC Super, Sunsuper and other investors.
