Asset management: Infrastructure funds take off in Asia
The listed infrastructure fund, which is common in Australia, is gaining traction in Asia, with two new structures hitting the market in recent weeks.
By Chris Wright
Macquarie Korea Infrastructure Fund was listed in Seoul and London in March, raising W942 billion ($1 billion). It was the first infrastructure fund to be listed in Korea but followed a model that Macquarie Bank has refined numerous times in Australia and elsewhere in the world: pour a group of assets generating predictable revenue streams into a fund, list it, and ensure a steady flow of fees, often performance-based, back to Macquarie Bank itself. Macquarie has now done this 24 times.
MKIF has investments, or commitments to invest, in 14 assets, 13 of them toll roads, each of them with some form of inflation-adjusted long-term government revenue support tied in. It is run by a joint venture between Macquarie and Korea’s Shinhan Financial Group.
In its own right, MKIF was a significant deal: the second-largest Korean IPO in a year, only the fourth dual-listing IPO from the country and one of the biggest IPOs in Asia this year. But it’s the sense that this is the first of many that makes the transaction eye-catching. Korea has a lot in common with Australia when it comes to the demands of institutional capital: each country has compulsory contributions to pension systems, which creates a great deal of cash seeking assets that generate stable long-term yields, and infrastructure is ideally positioned to provide that.