Australia's No.2 Pension Fund Targets UK Infra, Private Markets

The Facts -

The Australian Retirement Trust Expands to London

The Australian Retirement Trust (ART), a superannuation fund worth A$280 billion, has extended its operations to London to boost its global investment competencies. Chief Investment Officer, Ian Patrick, commented that this move demonstrates their commitment to build sustainable relationships and maintain a long-term global presence.

It aligns with ART's considerable international presence as more than 40% of its assets are located outside Australia. Further, ART has over A$25 billion invested in the United Kingdom and Europe. The London office will host three of ART’s core infrastructure investment specialists, and Patrick expects a limited growth in overseas staff.

Direct Investments

The launch of ART’s UK office comes amid the growing trend of Australian superannuation funds seeking investment opportunities beyond their borders. This is driven by the rapid growth of Australia's superannuation industry, and similar steps have been taken by other major players like Aware Super and AustralianSuper.

Patrick pointed out the advantages of having an office close to their external investment managers. This strategy will help ART secure more significant investment opportunities for their members. The focus will be on direct investments in infrastructure, real estate, and private equity, with a special emphasis on sectors like energy transition, affordable housing, life sciences, technology, and digital infrastructure.

According to Patrick, the initial dominance of the London office will be infrastructure investments, followed by real estate due to its overlap with infrastructure. Private equity and private debt may be considered later based on the alignment of skill sets. ART will not dedicate a specific capital pool to the London office, all investment decisions will be made in the context of the total portfolio.

Real-Time Advantage

Patrick emphasized that the London office's contribution to the fund's overall growth may be limited. The real advantage lies in the potential for improved relationships and the ability to conduct real-time due diligence. This is especially beneficial as having staff in the same timezone as their partner managers allows co-diligence of assets that they consider as opportunities for their portfolio.

Despite being the second largest super fund in Australia, established in 2022 following the merger between Sunsuper and QSuper, ART expects relationship-building with new partners and co-investors to be challenging. However, Patrick believes the opportunities outweigh the challenges, such as identifying and working with new partners in their own timezone.

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