An industry super fund is exposing its 1.9 million members to an additional infrastructure asset after securing a stake in NSW electricity distribution company Endeavour Energy.
REST Industry Super, alongside a consortium of companies including Macquarie Infrastructure and Real Assets, and Canada's British Columbia Investment Management Corporation, successfully bid for a 50.4% stake in the energy company under a 99-year-lease.
Endeavour Energy, a poles-and-wires business, currently provides electricity to 2.4 million households across greater Western Sydney, Central Western NSW, Illawarra, South Coast and Southern Highlands.
REST Industry Super chief executive Damian Hill says the deal will deliver Core Strategy fund members stable long-term cash flows in excess of their return targets.
"REST members across NSW can be assured that with this transaction, the Endeavour Energy electricity network is powering their own retirement," Hill said.
REST's Core Strategy product has a strategic asset allocation of 6% to infrastructure, with $2 billion in infrastructure investments managed by AMP Capital and Super Investment Management (a subsidiary of REST).
According to REST Industry Super general manager, investments, Brendan Casey, the fund sees a range of opportunities in the energy sector.
"We're continuing to monitor this space closely - as the electricity industry changes we expect to see other opportunities to generate stable, risk-adjusted returns emerge for our members," Casey said.
"We look for regions with strong growth profiles coupled with quality, well-maintained assets and Endeavour Energy ticked all of these boxes."
REST currently holds stakes in a number of energy providers including Collgar Wind Farm (WA), PowerCo (NZ dual-energy distributor) and Capistrano Wind in the United States.
The transaction delivered $7.624 billion to the NSW government in gross proceeds, which Premier Gladys Berejiklian says will be used to under the $20 billion Rebuilding NSW Infrastructure program.
The NSW government will retain a 49.6% interest in Endeavour Energy and have ongoing influence over operations as lessor, licensor and as safety and reliability regulator.