Leading institutional investors support first pan-European dedicated infrastructure fund

08 April 2004

Macquarie European Infrastructure Fund launched

Macquarie Bank today announced first close of the Macquarie European Infrastructure Fund, the first pan-European dedicated infrastructure fund. The Fund has achieved total initial commitments of €422m from leading institutional investors including Stichting Pensioenfonds ABP of the Netherlands, one of the world’s largest pension funds, Generali, Italy’s largest insurer, Oslo Pensjonsforsikring, Norway’s largest municipal pension plan, Dexia Credit Local of France and Caisse de dépôt et placement du Québec of Canada.

According to Mr Jim Craig, Managing Director of the Macquarie European Infrastructure Fund, the launch reflects growing interest in the infrastructure sector in Europe, particularly among pension funds and other investors with a long-term outlook.

 “We are seeing the emergence of infrastructure as an alternative asset class in Europe,” Mr Craig said. “Pension funds and other institutional investors are recognising that infrastructure investments, which have the potential to offer comparatively stable, long-term real returns, provide a highly desirable match for long-dated liabilities. The other side of the equation is that community assets need long-term funding,” he said.

 “Infrastructure assets display unique characteristics. Their essential and long-term nature, combined with strong competitive position, leads to stable and predictable consumer demand. Hence their cashflows can be more reliably predicted than those from other asset classes. This stability in operating cashflows can reduce the overall volatility of returns for investors,” Mr Craig said.

“In our experience, investors are finding this combination of sustainable yields, lower volatility and inflation-linked returns increasingly appealing,” he said.

The Macquarie European Infrastructure Fund is the first fund of its kind in Europe. It is a wholesale vehicle targeting investments in infrastructure and related assets in European OECD countries. The Fund aims to deliver sustainable cash yields and moderate capital growth from a diversified portfolio of quality infrastructure assets, potentially including electricity and gas transmission and distribution networks, water and sewerage companies, rail and related infrastructure, airports, communications infrastructure and toll roads.

The Fund will seek investments that provide essential services to the community, have a strategic competitive advantage and offer sustainable and predictable cashflows.

The Macquarie European Infrastructure Fund will benefit from Macquarie’s position as a global leader in the infrastructure sector. Macquarie has almost €10 billion in infrastructure funds under management worldwide. Infrastructure investments managed by Macquarie include assets in transportation, water, telecommunications and energy sectors around the world, including UK, Germany, Spain, Portugal, Italy, Sweden, Canada, US, Chile, Australia, Korea, Japan and South Africa.

In the last six months Macquarie Bank acquired two seed assets for the Fund - UK utility South East Water and Arlanda Express, the high speed rail service linking Sweden’s Arlanda Airport to Stockholm city centre. Investments in both assets will be owned by  the Macquarie European Infrastructure Fund and its co-investors.

According to Mr Craig, the Fund is continually looking for attractive investment opportunities, and expects to announce further acquisitions in the next 12 – 18 months.

“The European infrastructure sector is generating a strong and growing pipeline of interesting opportunities,” Mr Craig said. “As a global leader in infrastructure finance, Macquarie is uniquely placed to access outstanding investment opportunities for our investors. We see this as a key strength of the Fund,” he said.

NOTES TO EDITORS:

The Macquarie Bank Group

The Macquarie Bank Group provides specialist investment, advisory and financial services in select markets around the world, with over 5000 people in 20 countries. Macquarie’s European base is London where it has over 200 people, with additional offices in Dublin, Frankfurt, Munich and Vienna. The Group consists of Macquarie Bank Limited, the leading Australian investment bank, and its worldwide affiliates. Macquarie Bank has a market capitalisation of approx €4.5 billion.

ABP is the pension fund for public employees in the governmental and education sectors in the Netherlands.  With assets amounting to nearly €150 billion at year end 2003, ABP is one of the largest pension funds in the world.  At year end 2003, ABP's asset mix consisted of 45% fixed income, 36% equities, and 19% alternative investments.  The strategic aim is to further enhance investment returns through a slight decrease of fixed income in favour of private equity, hedge funds, commodities and other alternative investments and an increase of asset backed securities, corporate bonds and inflation-linked bonds.

The Generali Group has a vast, diversified network of international interests, making it the largest insurer in Italy and one of the most important in Europe and the world.  Generali carries out insurance operations in 50 markets over the five continents and has assets under management of €255 billion.  Generali is quoted on the Milan Stock Exchange with a market capitalisation of €27 billion.

OPF is the pension fund for the employees of the city of Oslo.  It is the largest municipal pension plan in Norway with approx €3.6bn funds under management.  OPF has 18-20% of its assets in equity, 5% in real estate and the remainder in fixed income.  OPF was the best performing pension fund in Norway in 2003 and is looking to diversify its current asset allocation.

Dexia Crédit Local is a subsidiary of Dexia, the Franco-Belgian banking group.  Dexia Crédit Local is dedicated to the group's primary business: public finance and financial services to the public sector.  Clients include the largest local governments in Europe and North America, as well as public hospitals, social housing etc.  Dexia has total assets of €351bn and a market capitalisation of €15b.  The Group is one of the 15 largest financial institutions listed on the stock market in the euro zone (listed on Brussels and Paris stock exchanges).

Caisse de dépôt et placement du Québec

The Caisse de dépôt et placement du Québec manages funds for public and private pension and insurance funds.  Its main depositors are the Régime de retraite des employés du gouvernement et des organismes publics, the Fonds du Régime des rentes du Québec, the Fonds d'amortissement des régimes de retraite, the Fonds de la santé et de la sécurité du travail, the Commission de la construction du Québec, the Société de l'assurance automobile du Québec and the Régime de retraite du personnel d'encadrement. Through certain subsidiaries, the Caisse offers private investment funds and real estate management services to external institutional investors. The leading institutional fund manager in Canada with $140 billion of assets under management as at 31 December 2003, the Caisse invests in the main  financial markets as well as in private equity and real estate.

SOUTH EAST WATER

South East Water is the second largest of 12 water only companies in the United Kingdom. It supplies 400 million litres of water per day to approximately 1.5 million people in the South East of England, in a catchment area that covers some 3607km² of Kent, Sussex, Surrey, Hampshire and Berkshire.

South East Water services a prosperous catchment area with 2002 GDP of £140 billion, the second largest regional economy in the UK, marginally behind London. The region accounts for almost 16 per cent of the UK’s GDP and 15 per cent of the total business base.  Over the next five years the population of the region is expected to grow at a rate of 0.9 per cent per annum, faster than the UK average of 0.7 per cent per annum.

South East Water has approximately 430 employees. The company is responsible for 19 Sites of Special Scientific Interest (S.S.S.I.s) a Natural Reserve, two Local Nature Reserves and numerous Areas of Outstanding Natural Beauty. South East Water received a major commendation for work at Arlington Reservoir in this year’s Business Commitment to the Environment  (BCE) Awards.

IMAGE 1: Arlington Reservoir and valve tower. Arlington, in East Sussex, is one of South East Water’s two open reservoirs.

IMAGE 2: Ozonation process at Arlington Water Treatment Works

ARLANDA EXPRESS (A-TRAIN)

A-Train is Sweden’s first privately financed infrastructure project and operates Arlanda Express, the express rail service linking Stockholm’s main international and domestic airport at Arlanda and Stockholm Central Station, a distance of 42kms by road. The Arlanda Express was established to improve transport links to Arlanda Airport and reduce anticipated levels of traffic congestion arising from air traffic and associated passengers. The high speed service travels at up to 200km per hour, providing a journey time of 20 minutes each way. Six trains run per hour during peak hours and Arlanda Express operates 19 hours per day.

A-Train, whose traffic operations were launched in November 1999, currently has approx 180 employees. It operates under a Swedish Government concession that extends to 2040. A-Train is the first company to satisfy the new European environmental requirements in accordance with the Good Environmental Choice label.

IMAGE 1: The high speed Arlanda Express travels at up to 200km per hour, linking Stockholm airport to the city centre

IMAGE 2: Arlanda Express - six trains per hour service passengers travelling between Arlanda Airport and Stockholm city centre