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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.”

 

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