Andrea McElhinney

AMP Capital has reached financial close on a deal to acquire a 5.2 per cent stake in the Victorian Desalination Project (VDP) from Pacific Partnerships.

The acquisition is funded by the AMP Capital Community Infrastructure Fund (CommIF).

VDP was delivered as a public private partnership (PPP) and is the largest desalination plant in the Southern Hemisphere. It is a rainfall-independent source of drinking water and capable of supplying up to 150 billion litres a year. This is approximately one third of Melbourne’s annual water consumption.

The project is a $3.5 billion capital investment between the Victorian Government and AquaSure, the company contracted to finance, design, construct, operate and maintain the project for 30 years. There are 23 years remaining to the end of the concession.

The scope of the project includes the construction and operation of the desalination plant, the 84-kilometre transfer pipeline to connect the plant to Melbourne’s existing water supplies, delivery of power supply for the project, operations and maintenance, and the purchase of renewable energy credits. The plant was successfully commissioned in December 2012.

AMP Capital Community Infrastructure Fund Manager Andrea McElhinney said: “We are delighted to invest in one of Australia’s largest PPPs with a world-class design that provides high-quality water to the Melbourne network. The asset also delivers stable, long-term monthly service payments from the Victorian Government to our investors. This latest acquisition will increase CommIF’s exposure to the water sector as it will sit alongside existing water assets such as Riverland Water and AquaTower.

“CommIF has experienced significant growth since AMP Capital acquired the fund in 2010 from the Royal Bank of Scotland, with the net asset value growing from approximately $55 million in September 2010 to more than $500 million in October 2016. We are extremely proud of CommIF’s achievements andsuccess in the secondary social infrastructure market, providing investors with a diversified portfolio of existing operational assets that deliver immediate yield. We look forward to continuing this momentum by working with state governments and key stakeholders to deliver value-for-money projects that benefit thecommunity.”

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Andrea McElhinney

AMP Capital has acquired the Kalgoorlie-based Eastern Goldfields Regional Prison Redevelopment Project from Lend Lease and MLC.

The project, which will sit within AMP Capital’s Community Infrastructure Fund (CommIF), is a public private partnership (PPP) with the state government of Western Australia.

It involves two stages of capital works: the design, construction and commission of a new 350-bed prison and associated infrastructure, which is now commissioned, and then the demolition of the existing 100- bed facility and site remediation, which is underway. The deal also includes the provision of facilities management services.

The concession period is approximately 28 years, which comprises the construction period plus 25 years.

AMP Capital Community Infrastructure Fund Manager Andrea McElhinney said: “This project provides long-term, highly predictable cash flows that are underpinned by the Western Australian government. It has an attractive risk and return profile that fits perfectly with CommIF’s investment mandate.

“The acquisition also allows CommIF to expand its geographic exposure to Western Australia, providing our investors with further diversification benefit.”

CommIF is currently invested in 13 social infrastructure assets in Australia and New Zealand worth approximately $8.2 billion in enterprise value, which incorporates the value of the equity and the debt. These include primary, secondary and tertiary education institutions and other assets in the health, justice, defence, water and community sectors.

CommIF’s investor base is made up primarily of domestic institutional investors and high-net-worthindividuals but the fund is starting to attract the attention of global infrastructure investors.

Ms McElhinney noted: “Social infrastructure not only provides investors with attractive returns that are characteristic of the broader infrastructure asset class but our investors also like the fact its assets benefit the community. Offshore interest in Australian infrastructure has been a major theme of the local market during the last two years and social infrastructure has not been immune to this, with the first offshoreinvestor coming into CommIF this year.”

Financial close for the deal, which is subject to consent from the state and financiers, was achieved on 5 October 2016.

King & Wood Mallesons acted as AMP Capital’s legal adviser.

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Ms McElhinney will assume responsibility for the day-to-day portfolio management  of AMP Capital’s Community Infrastructure Fund (CommIF), which includes portfolio  optimisation, client interaction and investment activities.

She takes over from AMP Capital Head of Social and Aged Care Infrastructure  Julie-Anne Mizzi, who will retain overall accountability for the fund.

Ms McElhinney joined AMP Capital in December 2010 and has been an integral part of  the CommIF investment team as Asset Manager of a number of the fund’s key  assets.

Ms Mizzi said: “This promotion is in recognition of Andrea’s strong contribution  to the performance of CommIF.  With more  than 17 years’ commercial experience, Andrea’s familiarity with the fund,  detailed knowledge of the underlying assets and strong relationships with our  clients make her the ideal candidate to step up to a leadership role within the  team.

“I am delighted that we have been able to promote and recognise our strong internal talent as we position the Social and Aged Care Infrastructure business  for growth.”

The AMP Capital Community Infrastructure Fund provides investors with an unlisted  portfolio of high quality, Public Private Partnership-style social  infrastructure assets in Australia and New Zealand.  The fund focuses on  social infrastructure PPP assets within education, water, health, justice,  defence, community housing, recreational facilities, transport and other social  infrastructure sectors.

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