AustralianSuper merges ‘increasingly close’ property and infrastructure teams

AustralianSuper is merging its infrastructure and property teams to maximize the investor’s resources and knowledge in the two asset classes.

Last week, the Melbourne-based pension fund promoted its head of infrastructure Nik Kemp to the newly created role of head of global real assets. In his new position, he will oversee the newly combined team and report to head of mid-risk Jason Peasley, according to a release. Kemp joined the investor in 2013 and had spent the past six years leading the infrastructure department.

Reporting to Kemp will be former head of European property Paul Clark and former head of American infrastructure Derek Chu, who were named head of European real assets and acting head of American real assets, respectively. Monica Ryu, senior investment director at the infrastructure team, was appointed head of asset management for the real assets team. Meanwhile, the firm is looking to hire a new head of Australian real assets and head of strategic opportunities.

AustralianSuper is not the only superannuation fund to combine its real estate and infrastructure teams. In 2022, Australian Retirement Trust named Michael Weaver as its global head of real assets, overseeing both property and infrastructure investments, following the merger between QSuper and SunSuper.

“I think some investors thought it was a more cost-effective way to invest in a real assets business that includes both real estate and infrastructure,” said the head of capital markets at an Australian real estate manager. The executive noted that there could be an inclination to merge the two asset classes if the investor has a far superior performance or exposure to either real estate or infrastructure. “You probably have a lot of power and expertise in one of the two, so when there is a departure in the other, it makes sense to bring the teams together.”

Indeed, both AustralianSuper and Australian Retirement Trust have a significantly higher exposure to infrastructure than real estate, according to PERE data. AustralianSuper has allocated 13.78 percent of its portfolio to infrastructure and only 4.97 percent to real estate, while Australian Retirement Trust has allocated 11.59 percent to infrastructure and 6.89 percent to real estate.

The head of capital markets also thought increased capital flows into sectors like data centers – which can be included in both real estate and infrastructure allocations for investors – is leading to more mergers of the two businesses. “There was a conversation I had with one of the Australian investors and I didn’t know whether I needed to talk to the infrastructure person or the real estate person on a data center investment,” the executive said.

While AustralianSuper declined to comment further on the integration, the investor noted in a release that the combination of the two teams is a “recognition of the increasingly close relationship” of the two asset classes and the “need to deliver economies of scale” as the firm plans to double the size of its mid-risk portfolio by 2030 to more than A$150 billion.

“Over recent years,” Peasley said in the release, “we have seen the importance of sector selection in driving performance across both property and infrastructure, as well as a blurring of investment opportunity classification across the two asset classes, which we expect to only increase in the future.”