Rest's Infrastructure Investments

What are infrastructure investments

Infrastructure investments are physical assets including facilities or networks that keep a country operating efficiently. Examples of infrastructure assets include toll roads, railways, airports, power stations, pipelines, energy grids, ports and telecom towers.

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Common features of infrastructure investments

Infrastructure assets tend to be very large, long life assets. An investment in infrastructure can be made via:

• Direct ownership of an asset;
• Pooled funds managed by third party Fund Managers;
• Co-investments associated with third party Fund Managers;
• Through listed market shareholding
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Benefits of infrastructure Assets

• The long-term investment horizon of infrastructure assets may align to the long term investment objectives of members;

• Infrastructure assets can produce long-term income streams (stable dividend yield with moderate capital growth);

• For some assets, the revenues can be stable, regulated income streams pegged to inflation;
• Infrastructure can add diversification benefits to a portfolio invested in other asset classes - although it can become more correlated in extreme markets (like the Global Financial Crisis).

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What type of infrastructure does Rest invest in

Here are some of the infrastructure assets that Rest invests in (directly or indirectly) for our members, as at 30 June 2021:

• Melbourne and Launceston airports (VIC, TAS);
• Endeavour Energy (NSW), the electricity distribution company servicing 2.4 million people in households and businesses across Sydney’s Greater West, the Blue Mountains, Southern Highlands, the Illawarra and the South Coast;
• Powerco (NZ), New Zealand’s second largest gas and electricity distribution company;
• Gatwick Airport (London, UK);
• We fully own Collgar Wind Farm (WA), which generated over 25% of WA’s wholesale renewable power in FY2020, enough to power 130,000 average WA homes for a year;
• Long Beach Container Terminal, located California, is one of the greenest port terminals in the world. They use electricity to power their operations instead of diesel, which avoids polluting emissions
• Reliance Rail (NSW), the business is responsible for the delivery and maintenance of the Waratahs trains operated by Sydney Trains.

Rest’s infrastructure asset class has the ability to invest in listed infrastructure investments, where compelling opportunities are identified.

Planes on the tarmac at Gatwick Airport Planes on the tarmac at Gatwick Airport
Gatwick Airport - UK
Collgar Wind Farm Collgar Wind Farm
Collgar Wind Farm - Australia
Long Beach Container Terminal - USA Long Beach Container Terminal - USA
Long Beach Container Terminal - USA
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Responsible investment and infrastructure

Responsible investment is an important part of managing financial risk and generating competitive, long-term returns for our members. It involves considering a broad range of matters, including environmental, social and governance (ESG) factors.

Embedding ESG into our investment decisions also helps us protect the long-term value of our members’ retirement savings. We engage with our infrastructure investment managers, investee company management and consultants to ensure ESG is integrated into their processes. Some examples of the ESG factors we consider for infrastructure assets include:

Environmental Social Governance
Environmental compliance Occupational health and safety Governance structure
Climate-related physical and transition risks Safety culture Assessment of partners/co-investors
Environmental liabilities Community engagement Shareholding rights

We also consider specific ESG factors that might be unique to a particular asset. For example, environmental factors like air pollution and noise management are particularly important for airports.

In 2019, Rest became an investor member of GRESB, which now forms an additional ESG tool we can use to assess the ESG performance of external managers and infrastructure assets. For more information about how we integrate ESG into our investment decisions, see our Responsible Investment page.

Where are Rest's infrastructure assets located?

The Rest infrastructure portfolio aims to be broadly diversified across industry sectors, including a selection of investments from the following areas:

Transport Utilities Energy Telecommunications
Airports Electricity distribution Renewable Generation Data centres
Toll roads Gas distribution Pipelines Fibre optic networks
Seaports      
Rail      
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Specialist Investment Managers

Rest’s infrastructure investments are managed by Rest’s internal investment management team and external managers. You can find further details on Rest’s investment managers in infrastructure and other asset classes from the "How we Invest" section of the Rest website.