Among the other funds, REST is already making its own path. After investing in the Investec-developed Collgar wind farm in Western Australia, in November the fund announced an alliance with Spanish infrastructure developer Cintra, a subsidiary of Ferrovial, to invest in and operate Australian toll road projects.

Get in from the get go?
The other issue for funds is whether they are likely to become greenfield infrastructure investors at the project finance stage or simply continue to invest once the projects are finished and revenues are flowing. Historically, funds have considered it too risky to invest at too early a point in infrastructure, but a big hole has opened up in the project financing market after European banks – such as WestLB – quit the Australian market and other banks reduced the maximum tenor they would lend to. The Basel III capital adequacy regulations have had an impact on bank’s willingness to lend longer term.

The infrastructure industry remains hopeful that super funds can evolve and become providers of debt for the early stages of projects. Many super funds, however, still regard the development risks in project financing as unacceptable. Telstra Super dipped its toe into the water by getting involved in the Barangaroo deal with CPPIB and is on record as saying that it viewed debt as a way of “de-risking” its investment by ensuring its debt position was well covered. One way forward could be pooleddebt vehicle between funds, and Challenger has taken steps in this area with the launch of a $250-million vehicle aimed at medium-sized funds. Infrastructure is only one of several asset classes the fund will invest in, however, it points the way forward in the evolution of the relationship between funds and infrastructure.