The Trust Company says Australia is experiencing a wave of Canadian investment into Australian infrastructure and property that shows no sign of abating.
Having recently returned from a business trip to visit Canada’s leading pension funds, Andrew Cannane, General Manager Corporate Clients, The Trust Company, said Canadian pension funds are increasingly focusing on property and infrastructure investments in Australia, with the local market’s attractive yields, high quality assets and proximity to Asia the main drawcards.
“Canadian pension funds are already heavy investors in infrastructure in their own country, owning a significant proportion of the available property and infrastructure in Canada. This strong appetite for infrastructure has led them to look further afield to international opportunities,” Mr Cannane said.
“The rising trend of privatising quality public assets in Australia, such as ports, desalination plants and road and rail infrastructure, makes Australia a compelling investment opportunity for these investors,” Mr Cannane said.
Canadian investment in Australian property and infrastructure has risen dramatically in recent years, with Australia now the third largest global destination for Canadian direct investment abroad (excluding tax havens). Canadian direct investment into Australia is approximately $25 Billion CAD, making the two way investment between both countries around $45 Billion CAD.
Feedback from Canadian funds on Mr Cannane’s recent trip indicated their interest in the Australian property and infrastructure market remained strong, partly because of the transparent sale processes being run and the high quality of the assets for sale.
“These funds are looking for stable, cash flow generating assets that can be held for the long term, with returns that are not highly correlated to share markets,” Mr Cannane said.
“Coupled with Australia’s reputation as a safe investment haven, its robust regulatory regime, the relative strength of the Australian economy, and the attractive yields of property and infrastructure assets relative to international markets, Australian infrastructure ticks all the boxes.
“On a relative risk weighting Australia is still a most attractive investment destination for these pension funds. We would expect to see many of them continue to build out their platform in Australia in the years ahead,” Mr Cannane concluded.