“The Australian Infrastructure Pipeline – Opportunities for investors” suggests that capital recycling from these asset sales will play a crucial role in financing a new wave of nation transforming infrastructure development.
Report Key Findings
- The peak of the natural resources investment boom does not mean a decline in opportunities for investors in Australian infrastructure – in fact the opposite is true and investment opportunities have rarely been stronger.
- The bulk of deals will involve the privatisation of state-owned assets, while the federal government could put Medibank Private up for sale.
- Subject to winning a mandate to sell state-owned assets from the Queensland and NSW electorates, ANZ has identified more than $220 billion worth of Australian infrastructure assets for investment in the period to 2020, with around $175 billion of opportunities over the next five years.
- ANZ expects capital recycling from these asset sales will play a crucial role in financing a new wave of economic infrastructure development over the coming decade.
- ANZ estimates PPP projects worth around $50 billion will commence by 2020. These projects.
ANZ’s Global Head of Utilities and Infrastructure David Byrne said: “The timing appears right for a new wave of Australian infrastructure privatisations. Market demand for these assets is strong and there is an unequivocal desire to repair state balance sheets, while also funding new investment.
“The Commonwealth government appears keen to facilitate such sales and the raft of upcoming state government elections – five by mid-2015 – provides political parties with the opportunity to seek a public mandate for these sales.”
“ANZ has identified at least $110 billion of potential state government infrastructure asset sales that could come to market by the end of the decade, with the power and ports sectors set to lead the way,” Mr Byrne said.
The report concludes that the political cycle will play a significant role in the timing of when these assets come to market, with the second half of 2015 and the first half of 2016 shaping up as a window for significant sales. Commonwealth policy reform to incentivise state government asset sales could bring that timetable forward.
“While market demand for these assets is strong, a coordinated approach between the Commonwealth, the states and government-owned enterprises will be important to avoid oversupplying the market and achieving appropriate value for these assets,” Mr Byrne said.