The $160 billion UniSuper has made a US$500 million ($765 million) anchor commitment to Macquarie Asset Management’s (MAM) infrastructure adjacency fund, a private equity strategy focused on mid-market companies that provide services to infrastructure end markets.   
 
UniSuper’s commitment includes US$250 million in co-investments in the strategy’s first two investments, DynaGrid – a utility service provider that upgrades and maintains transmission and substation infrastructure in the US, which MAM bought into in February – and Potter Industries, which manufactures glass beads and microspheres critical for road infrastructure and performance materials. The strategy was launched earlier this year, with UniSuper its largest investor to date, while Partners Capital was also involved in the latter transaction. 
 
“It’s very much a picks and shovels approach,” says Sandra Lee, UniSuper’s head of private markets. “You’re not putting all your eggs in one basket in a very large single infrastructure asset. But we’re also going into businesses that are a couple of layers removed and aren’t fully exposed to the cyclical risk of a particular project.”  
 
Lee says that, in addition to the returns on offer, DynaGrid and Potter Industries are tapped into the sort of megatrends the fund thinks will shape markets for decades to come.  
 
“For DynaGrid, it’s around the energy transition. A lot of assets are aging, and there’s this huge demand for US utilities to harden and maintain their grid, and businesses like DynaGrid are getting a lot of work coming through… And we’re now seeing returns that have exceeded our buy-in equity case.”   
 
The cheque isn’t the largest UniSuper has written, and isn’t for a single investment – it bought Vantage Towers in 2023 for about a billion dollars, and owns more than 15 per cent of Sydney Airport – but Lee reckons it’s just right for the mid-market private equity deals the strategy aims to access.  
 
“UniSuper’s got a very large core infrastructure portfolio, so this will be great diversification for our members. But we’re not seeking growth at all costs. This strategy is still underpinned by very sound structural tailwinds around infrastructure growth, and we feel that gives it a nice blend of defensive positioning with some growth optionality.” 

‘Smart partnership’  

The relationship between UniSuper and MAM is an example of an internal initiative Lee calls “smart partnership”. UniSuper doesn’t want to work with hundreds of managers, but a “tighter group of top tier managers”; it typically wants to be their cornerstone or anchor investor for new strategies, and get priority access to their investment pipeline. 
 
“But I think the thing that takes it to the next level is that we typically would only do these deals with Macquarie if they put skin in the game – capital from their own balance sheet,” Lee said.  “For us, that’s the ultimate alignment.”  
 
That aspect of “skin in the game” was also integral to UniSuper’s decision to become a foundation investor in MAM’s green energy and climate opportunities fund in 2024.  
 
Lee says that UniSuper takes a hybrid approach to the management of its private markets portfolio, with domestic assets more likely to be handled entirely by the fund’s own internal teams. 
 
“Then there’s investments like this one where we’re still investing directly with a partner like Macquarie, where they are assisting us in terms of sourcing the deals and providing the ongoing asset management but we’re still actively involved in the investment decision-making. UniSuper has got governance rights so we can pop our own nominees on the board.”  
 
That model is “the best of both worlds”, Lee says; accessing MAM’s reach and expertise, while still investing directly alongside them. And the ability to do that has somewhat reduced the need for UniSuper to set up offshore. Lee says that there is still a big question about super funds’ ability to hire the kind of investors that will be able to access the deals they need, and that not heading offshore has been more cost-effective.  
 
“It probably works differently for others. And we do have a presence offshore, because I and my team spend a fair bit of time visiting our investments, speaking to our investee or portfolio company management teams.  
 
“We utilise and tap into our partners’ global networks, who can have hundreds of bodies right across the US and Europe and other regions. I think that will be hard to achieve for any Australian super fund, to be honest. But others have different strategies.”