IFM Investors vows to invest $25b in major infrastructure over next decade


IFM specialises in infrastructure and manages about $150 billion on behalf of more than two dozen industry super funds, ranking it behind the Future Fund, which invests $165 billion on behalf of the commonwealth in equities and bonds as well as infrastructure.

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The investment forecast, to be announced on Friday, is based on business plans from each of the companies IFM owns in part with other investors, but the outlays are expected to be larger when new assets are added over time.

The $25 billion includes investment in electricity network Ausgrid, the major airports in Adelaide, Brisbane, Darwin and Melbourne, the Port of Brisbane, Port Botany and Port Kembla.

The outlays are expected to generate more than 50,000 new jobs over the next decade, according to IFM’s analysis, which comes as Mr Himbury is due to appear at a parliamentary inquiry into the super industry.

Treasurer Josh Frydenberg urged business chiefs in August to invest in growth for their companies and the country, saying they should “back yourselves to grow” rather than spending the money on share buybacks.

“With Australian corporates enjoying healthy balance sheets, record low borrowing costs and strong equity market conditions, the question is are corporates being aggressive enough in the pursuit of growth?” Mr Frydenberg said.

The remark sparked a debate about whether companies were bullish enough on their investment plans at a time when the government was worried about an economic slowdown.

While the industry fund sector is sometimes a target for Liberal MPs who do not like its links to the union movement, the IFM investment plan appears to act on Mr Frydenberg’s call. IFM is chaired by former Labor cabinet minister Greg Combet.

Labor and Liberal governments have turned to the super industry over the past decade to encourage more investment in Australian companies, sometimes expressing frustration that the funds were not buying big local assets.

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IFM and industry fund Australian Super bought Ausgrid for about $16 billion three years ago in a lightning deal after the federal government blocked a Chinese consortium on national interest grounds. NSW Auditor-General Margaret Crawford later found the NSW government could have sacrificed about $610 million in enterprise value because of the way it ran the Ausgrid sale.

Mr Himbury conceded the super industry should do more to disclose its investment plans and assure Australians that privatisations did not have to lead to higher prices and lower service quality for consumers.

“The super sector could do more to explain what it is doing in terms of returns and the impact on the economy,” he said. “There is an opportunity for us to talk about what we call the pension-public partnerships.

“Firstly, that means identifying and agreeing on the significant projects that would be good for the country. Secondly, it means getting together and working out how we can collaborate and if possible agree on risk and return parameters.”

Mr Himbury cited Ausgrid as an example of the way a privatisation did not have to lead to higher prices. IFM had promised prices for customers would be lower in 2020 than they were in 2014 at Ausgrid. “And we will deliver that,” he said.

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