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AMP Capital has renamed its long-standing Infrastructure Equity Fund the AMP Capital Diversified Infrastructure Trust (ADIT) and announced a capital raising program that aims to attract A$300 million from new and existing institutional investors in Australia and New Zealand.
ADIT has also been restructured to become a stapled trust, which will increase the fund’s ability to acquire new assets by removing the limitation that prevents it from acquiring controlling stakes in operating businesses. This move will broaden ADIT’s investment universe, enhancing its ability to deploy capital and increase its diversification. It will also help ADIT to attract and raise new equity commitments.
The Infrastructure Equity Fund was launched in 1995 and is one of the longest-running infrastructure funds globally. It holds a diversified portfolio of quality, mature infrastructure assets in Australia and New Zealand and aims to generate stable, long-term returns. Its assets include Melbourne Airport, Powerco New Zealand, Sydney University Village and the M5 Interlink Roads.
AMP Capital Head of Australia and New Zealand Infrastructure Equity Funds Michael Cummings said: “ADIT’s investment proposition is as compelling as ever, 21 years after it was launched. However, we wanted to modernise the fund’s structure to make it more attractive to today’s investors and to improve its ability to raise and deploy capital.
“We expect deal flow to be strong in Australia for the remainder of 2016 particularly in the mid-market range, which is where we focus, as this is where we see the best relative value is for our investors. More opportunities mean an increased level of transaction activity within the fund, which will be enhanced by the new stapled structure that enables ADIT to acquire controlling stakes of target assets. With this in mind, we have launched a capital raising of up to A$300 million in anticipation of the stronger deal flow for the next six to 12 months and would like to increase ADIT’s exposure to sectors such as transport, ports and student housing in particular.”
ADIT has performed strongly over one, three and five years, with returns (to June 2016) of 20.3 per cent, 17.8 per cent and 15.7 per cent, respectively (net of fees and including franking credits). Performance has improved after the portfolio was rebalanced towards core assets. According to Mercer, ADIT is the best performing Australian infrastructure fund for three and five-year periods to 31 May 2016 and the second-best performing Australian infrastructure fund for the one-year period to 31 May 2016.
Mr Cummings added: “Low bond yields, market volatility and a growing appreciation of the attractive risk adjusted returns that infrastructure can achieve have all contributed to increased interest in the asset class globally. Australian investors have been at the forefront of infrastructure investment for many years now and we are continuing to see greater allocations to it. This has also been helped by a renewed focus on infrastructure development by the state and federal governments. The new-look ADIT is well placed to take advantage of the myriad opportunities in the market for our investors.”
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