Macquarie Global Infrastructure Fund II acquires interest in attractive UK gas distribution asset

14 September 2004

The fund underlying Macquarie's current retail infrastructure offer, Macquarie Global Infrastructure Trust II, has recently announced the acquisition of its first asset.

Macquarie Global Infrastructure Fund II (GIF II) has announced it has acquired a share in the UK-based Wales and the West Gas Distribution Network (Wales & the West DN) from National Grid Transco.

Wales & the West DN is a regulated gas distribution business comprising almost 34,000 km of gas distribution pipelines in Wales and the South West of England.

Wales & the West DN, which operates in a mature regulatory environment, is expected to generate strong and sustainable cash yields for investors.

John Rowley, head of Macquarie New Zealand's Financial Services Group, said New Zealanders can access the GIF II fund through the retail “feeder fund”, Macquarie Global Infrastructure Trust II (MGIFT II) which allows investors with as little as A$10,000 to access investments such as this major British gas distribution pipeline.

The opportunity to invest in MGIFT II closes on September 30, 2004.

GIF II's investment in Wales & the West DN is as part of a consortium including Macquarie Bank, Macquarie European Infrastructure Fund, AMP Capital Investors on behalf of AMP Life, Canada Pension Plan Investment Board, Challenger Financial Services Group, Industry Funds Management and the Northwestern Mutual Life Insurance Company.

Mr Rowley said the Wales & the West DN provided a good example of the high quality infrastructure investments that GIF II is seeking out globally as governments increasingly turn to the private sector for finance.

“GIF II was created to invest in global infrastructure businesses that offer stable and predictable returns for our investors,” Mr Rowley said.

“The Wales & the West DN is just such a business – providing high quality assets with experienced management and staff that is expected to generate strong and sustainable cash yields over a long period of time.

“New Zealand retail investors now have the opportunity to invest in this British business through Macquarie Global Infrastructure Trust II.”

Mr Rowley said Macquarie had been a leader in infrastructure investment in Australia since 1996 and is the only Australian infrastructure fund manager that provided retail investors access to offshore investments via unlisted investment vehicles.

While New Zealanders can access domestic infrastructure assets, much of the early mover profits are simply not available anymore.

Mr Rowley said the story was different overseas where momentum for infrastructure investment is building.

“Governments throughout the world have reduced infrastructure spending during the past 30 years which has led to a massive infrastructure deficit.

“Globally this deficit is estimated to be $A2,200 billion and this is just to catch up with what, in the past, would have been the provision of publicly funded and publicly owned assets.”

This deficit is expected to be a major driver of returns as the rapid growth in the demand for private sector funding continues. Specialist providers of infrastructure financing will be in high demand, and Macquarie is one of the largest infrastructure specialists in the world, managing more than 60 major infrastructure projects worldwide.

Infrastructure, as an asset class, provides retail investors' portfolios with a unique combination of:

1. growth opportunities due to the expected growth in demand for private sector funding (unlisted infrastructure trusts in Australia have returned an average of 13.6per cent since inception (1996), compared to about 7per cent from international equities over the same period (1996 – 2003));
2. predictability of returns – the volume of gas used by British customers or the number of people using a tollroad, for example, is very predictable; and
3. opportunity to access unique assets and diversify investment portfolio risk as infrastructure performance is not linked to other asset classes such as property or fixed interest.

For more information please contact:

Hamish Anderson
Marketing Manager
Financial Services Group
Macquarie New Zealand Limited 
Telephone +64 9 363 1435
Mobile +64 21 513 431
Email hamish.anderson@macquarie.com