They have renamed the business Infrastructure Capital Group (ICG). Fitzpatrick, a Melbourne identity due to his football history – a former star player and current chair of the AFL – was a key participant in the rise of infrastructure as an asset class for super funds in the 1990s and early 2000s. He founded Hastings Funds Management, which was well-supported by some big super funds, and later acquired by Westpac Banking Corporation. Fallick, the chair and major shareholder of the placement agency Principle Advisory Services, is also no stranger to the asset class. He was general manager of the industry fundowned Development Australia Fund in the 1990s and has negotiated various unlisted investments with super fund clients in recent years. His managing director at Principle Advisory, Lachlan Douglas, is also a shareholder in ICG. Clarke, for his part, was the founding chief executive of the ANZ business, in which he held a minority shareholding, from 2000. He launched its Energy Infrastructure Trust in 2002 and the Diversified Infrastructure Trust in 2006.
At the time of last year’s purchase, the two trusts had asset values of about $800 million for energy and $250 million for diversified. Clarke says that the energy fund seemed like a contrarian investment at its time of launching but has earned an average of 20 per cent a year pre-tax since inception and “recycled” between $600-700 million of the investments. “Early on, the period was characterised by our building a credible offering and a number of opportunities presented themselves,” he says. “Institutions were investing in toll roads and airports but they didn’t have much in the way of energy assets.” The diversified fund was launched when there was a lot of exuberance in the market, Clarke says. The barriers to entry for managers and investors looked low but the investments were actually quite complex. “We weren’t prepared to buy overpriced assets,” he says. “We never participated in the PPP (public-private partnership) market for that reason. We always wanted to focus on investor returns.” Now, however, thanks largely to the GFC, the market has changed and ICG is prepared to look at some PPP investments in a new light.