Future Fund bags a piece of Transgrid

Future Fund has acquired a 10% stake in energy transmission operator Transgrid from $155.5 billion Canadian pension fund OMERS.

OMERS will retain a 10% stake in Transgrid, which it first invested in five years ago, and manage the Future Fund's stake following the deal.

Neither party, however, has disclosed the financial terms of the deal.

Future Fund chief investment officer Ben Samild said the investment in Transgrid aligns with the $240 billion sovereign wealth fund's risk and return objectives and will help safeguard the portfolio from higher inflation, interest rates, and currency volatility.

Future Fund director of infrastructure Peter McCosker, meanwhile, said the investment, which is "a valuable addition" to its infrastructure holdings, will diversify the portfolio.

Samild said it also reflects consideration of the opportunities in the energy transition.

"The transition requires the commitment of patient long-term investors, and we believe our capital will be well rewarded by supporting Transgrid's growth," he said

OMERS senior managing director and head of Asia-Pacific Christopher Curtain noted that Transgrid has been "leading an unprecedented transition of the Australian energy sector."

OMERS recognises the "high-quality, critical infrastructure services" Transgrid provides to Australian businesses and communities, he said.

"We remain excited about investing with Transgrid and our other Australian portfolio companies Port of Melbourne, FRV Australia, and Waveconn," he said.

OMERS executive vice president and global infrastructure head Michael Hill said Australia, in which the fund is now in its second decade of investment having deployed over $4 billion, is a "core part of our investment strategy."

"... essential community assets such as Transgrid remain an important contributor to the delivery of consistent and reliable returns on behalf of our members," he said.

OMERS chief investment officer Ralph Berg said he is proud to welcome Future Fund, "a liked-minded investor", as a co-investor in Transgrid via its strategic partnership program.

He said it will allow the fund to access its "excellent management platform and capabilities."

OMERS has been a direct investor in infrastructure for over 25 years.

Berg said that the asset class has delivered "strong and predictable returns," and added infrastructure assets in its global portfolio "have a strong social ethos and a purpose."

Future Fund was advised on the Transgrid transaction by JP Morgan and Allens.