Many developed economies face significant challenges in meeting current and future demand for essential infrastructure. Long term pension funds representing Workers Capital in the US, Australia and globally have significant long‐term capital available but often lack favourable long‐term investment opportunities. At the same time, governments are limited in funding essential infrastructure by often changing political needs. If infrastructure continues to be government owned, essential upgrades are reliant on increasingly cash strapped governments that need to balance their requirements against other competing demands.
IFM Investors’ view is that Pension Public Partnerships (a unique form of asset recycling) by which governments lease brownfield infrastructure assets to pension funds and invest the proceeds in greenfield infrastructure, creates a virtuous cycle that benefits both parties. The public benefits both as tax payers from a budgetary position and as pension fund members from a long‐term return position. The investment is for the full life cycle of an asset, not for an investment cycle.
Through infrastructure ownership, pension funds can focus on delivering the best possible outcome for an asset over the long term, without the limitations of shifting government priorities and budgetary pressures. If an upgrade makes sense for the long‐term success of an infrastructure asset, responsible pension funds will make the investment.
IFM Investors, on behalf of pension and super funds, has invested in infrastructure for over 20 years, providing benefits to Australia and other countries globally in terms of infrastructure capacity, economic uplift and attractive long‐term returns.