First State Super and Hastings Funds Management have won the bid to run New South Wales' land registry services, allowing the state to invest $2.6 billion in proceeds to infrastructure projects.
NSW Premier Gladys Berejiklian and Treasurer Dominic Perrottet announced the concession of Land and Property Information (LPI) titling and registry services to a First State Super-Hastings led consortium will help boost infrastructure across the state.
First State Super head of income and real assets Damien Webb told Financial Standard the 35-year concession is a significant investment for its 770,000 members that will generate an acceptable rate of return and "very attractive" cash flows.
Following a competitive tender process, the government entered into a binding agreement with the consortium, Australian Registry Investments (ARI), comprising 80% institutional investors (which includes First State Super and Hastings) and a 20% stake held by the Royal Bank of Scotland Group's pension fund (also managed by Hastings).
About $1 billion of the proceeds will upgrade Parramatta and ANZ Stadiums and refurbish Allianz Stadium, while the remaining $1.6 billion will be invested in other infrastructure projects through the Restart NSW fund. About 30% of proceeds will also be spent in regional NSW.
Webb said while investing in private assets and engaging with government is not new, the fact that it is a land and property information business classifies it as a relatively new asset class.
"This forms part of the program the NSW government has undertaken whereby they're asset recycling and they have been offering to market Ausgrid, Transgrid and now LPI....Certainly we will continue to have an interest investing in [opportunities] that really make sense for our members," Webb said.
He noted First State Super has also invested in major infrastructure projects such as the International Convention Centre Sydney, Barangaroo, Bankstown and Camden Airports, and hospitals in the Sunshine Coast and Bendigo.
The ARI consortium has received approval from Commonwealth regulators including the Australian Taxation Office, the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
Part of the deal means the government placing rigorous legislative and contractual safeguards around the concession to ensure property rights and data remain secure, and also capping price rises at CPI for the full term of the concession.
It also created a new external regulator, the Registrar General, to monitor and audit ARI's performance and if need be, resume control of the LPI business.
Webb added First State will make every effort to make the investment "a great success" and will continue to focus on investments that are key to making a society function better for members to retire into.