Macquarie in talks to manage billions of pounds of “super core” infrastructure

10 October 2016 - 12:00 am UTC

Macquarie is seeking to sign up a handful of institutional investors to a new platform for investing in lower risk European regulated infrastructure, InfraNews understands.

The Australian banking group is in early talks with institutional investors over the innovative scheme, which is a significant departure from a typical closed-end blind pool fund management model.
 
It is understood Macquarie is expected to use some funds from the scheme to help pay for National Grid’s four UK distribution assets up for sale, should its bid be successful.
 
Under the scheme, the investors will commit to invest in a series of infrastructure assets sourced by Macquarie Infrastructure and Real Assets (MIRA). 

MIRA will manage the assets on their behalf post-acquisition. Its fees will be lower than those it earns from its fund management business.

The strategy, which will target high single digit IRRs, is not expected to compete for assets with other MIRA-managed funds– which typically target double-digit returns. “The two investment strategies are complementary, not overlapping,” one source said.

MIRA is seeking to tap the capital of smaller direct institutional investors that lost out at competitive actions to investors with bigger financial firepower.

One source close to Macquarie said: “At the moment these lower risk assets are being acquired by direct investors due to their scale, meaning that smaller investors are not able to access these opportunities in a cost effective manner.”

Macquarie hopes to have invested all the capital on behalf of the investors from the strategy over the next two to three years. It has already drawn up a list of assets it plans to target outside the mandate of other MIRA-managed funds, which are described by sources as “very” low risk and fully regulated. 

It is expected to manage the assets for the long-term. One source said investors will have “a more perpetual-like hold”. 

Macquarie has to submit fully-financed final bids for National Grid’s four distribution grids by 28 November. It is expected to deploy capital from its own balance sheet – as well as from its new platform. It has also formed a partnership with CIC, Allianz and Dalmore, whose investment in the assets will be managed by MIRA. 

It is competing against a bid from Hastings Funds Management, Hong Kong-based gas utility China Resources Group and energy transmission firm Singapore Power.

Macquarie