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Super funds are eyeing the Rudd Government’s $43 billion National Broadband Network as a potential investment opportunity, but say it must be competitive on risk and return grounds. Last month, the Government announced the establishment of a new company to build and operate the network, to be funded through the Building Australia Fund and the issuance of Aussie Infrastructure Bonds (AIBs).
Trish Donohue, investments and governance manager at the $11.8 billion Cbus, said the fund would be encouraging its fund managers to examine and review the bonds once the details are released. Cbus has a 15 per cent allocation to infrastructure, and has supported infrastructure in other areas such as roads and airports in the past. “We definitely would look at it or encourage our fund managers to look at the opportunity when the details are available,” she said. Howard Rosario, chief executive of the $2.39 billion Westscheme, which has more than 50 per cent invested in unlisted assets, said the fund was keeping an eye on developments around the Network.
In 2002, Westscheme acquired a minority interest in TransACT, a Canberra-based broadband provider. “We do in-depth risk analysis of all opportunities; we look at the funding, the equity participations, the debt financing structures around the equity inputs, what sort of revenue streams are offered, the patronage of the system,” Rosario said. “We would look at all of those issues and in this case there would be regulatory issues that we’d need to pay attention to.”
The CEO of FuturePlus, Richard Powis, said there was too much uncertainty around the economics of the NBN for it to appeal to nervous members. “They’re still looking for positive returns, but more like just above the risk-free rate,” he said. “For infrastructure investments, that means we’re really looking for a government-guaranteed rate of return, but at the moment the NBN is an expenditure item…In any case I think it’s too simplistic for the Government to say a way to fund [the Network] is through super funds. Our only obligation is to provide for our members, not to gamble.”
