Industry Super Australia Welcomes Canberra's Support For Asia Infrastructure Investment Bank

Posted: Wednesday 24 June, 2015

The federal government’s decision to sign Australia up as a member of the Asia Infrastructure Investment Bank (AIIB) will unlock billions of dollars of infrastructure investment opportunities in the region, says Industry Super Australia.

“This move will be a huge fillip for Australian expertise in funds management, engineering, construction, architecture and legal services which could be widely applied to projects financed by the AIIB,” said Chair of Industry Super Australia, Peter Collins.

“Industry SuperFunds are Australia’s leading investors in infrastructure with a 20 year track record of matching long term savings to projects. Their capability has already put them at the forefront of pension fund investment globally.

“The activities of the AIIB will not only provide new opportunities to deploy capital but also export the funds’ know how in connecting pension savings to bankable projects,” he said.

Industry SuperFunds already direct between 10-15% of strategic asset allocation to infrastructure with a portfolio that includes airports, hospitals, ports, roads, railway stations, clean energy generation, gas pipelines, water treatment, and defence and civic facilities.  Over the next 5 years, up to $15 billion additional capital could be deployed under the right circumstances.

“The resources of the Asian Infrastructure Investment Bank will increase scope for pension and sovereign wealth funds to invest in long term, productive assets in the region,” said Mr Collins.

“Australia, like Asia, is dealing with the challenges of a shrinking workforce and an ageing population.  To meet this challenge it is vital we better match the long term investment horizon of retirement savings to strengthen our economic capital base, while simultaneously producing superior risk-adjusted performance returns on retirement savings. It’s a win-win.”

He says the AIIB could also provide a platform for Australia to internationally promote the use of the “Inverted Bid Model”, designed by Industry SuperFunds to cut bid costs and other barriers to entry to greenfield infrastructure projects for long term equity investors.

The Inverted Bid Model ensures a long term equity partner – such as a pension fund – owns and operates the asset over its economic life to the benefit of members.

“The IBM, which has been endorsed by the IMF, OECD, World Bank, G20 and B20, is currently being presented by Industry Super Australia to international regulators, pension funds and representatives from leading global economic forums in the United States and UK who are also seeking financing solutions to long term infrastructure investments,” said Mr Collins.

For further information, please contact Phil Davey 0414 867 188