Superannuation funds ramp up co-investment opportunities

Australian superannuation funds are actively partnering to seize investment opportunities in infrastructure and real estate compared to global counterparts, new research shows.

Preqin's Australian Superannuation Funds in Alternatives report finds partnerships in the form of joint ventures, consortiums and co-investments have been rising across the industry in a bid to access cost-efficient investments in real estate.

As the Australian superannuation industry experiences more consolidation and fund sizes increase, investment in infrastructure makes it more viable for smaller funds that could not previously access the asset class, the report said.

This has been in the form of "alternative property" such as medical, healthcare, storage, business parks and retirement villages.

About 60% of Australian super funds are involved in joint ventures compared to 26% of global pension funds.

Meanwhile, 47% of Australian super funds are involved in co-investment arrangements compared to 26% of global counterparts.

One industry fund noted investments are more accessible when a fund teams up with a manager or other superannuation schemes, given the changing nature of Australia's infrastructure investment landscape.

Co-investing is attractive because to be able to generate material returns on their overall portfolio, substantial amount of "buy-in" capital is required to invest in infrastructure, a number of super funds said.

Preqin didn't disclose how many took part in the research, but said it canvassed the likes of CARE Super, Club Super, CFS Investments and Intrust Super.

The report also found superannuation funds comprise 40% of institutional investors in Australia. Since the Global Financial Crisis they have recorded median growth of 12% year on year.

Read more: SuperannuationPreqinCARE SuperCFSClub SuperIntrust Super
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