GLOBAL - Australia's AUD77.05bn (€64.4bn) Future Fund has entered into a memorandum of understanding with the listed Australian Infrastructure Fund (AIX) to acquire its entire portfolio of assets.
The proposal to acquire AIX's assets - largely in the transport infrastructure sector - for AUD2bn represents a 10% premium to the AIX Directors' most recently published valuation of its assets and provides AIX stock holders with certainty of value, the Future Fund said in a statement.
David Neal, chief investment officer at the Future Fund, said: "Australian infrastructure assets are attractive to the Future Fund because of their strong correlation with Australian economic growth, inflation protection and relative high levels of earnings certainty.
"These characteristics provide a strong fit with the fund's mandate to achieve high, risk-adjusted returns over the long term."
The Future Fund's infrastructure program is now valued at over AUD4.3bn or 5.6% of the total portfolio.
Neal went on to say that the fund was now continuing to seek opportunities to increase its exposure to "quality" Australian and international infrastructure assets.
The Future Fund, established in 2006 to assist with the future payment of public sector pensions, already directly holds 16.8% of Australia Pacific Airports Corporation.
In May last year, IP Real Estate sister publication IP Asia reported that the Future Fund was looking to boost its investment in private equity, property and infrastructure.
As of March 2012, the fund invested 18.8%, or AUD14.4bn, of its global portfolio in alternative assets against 18.6% in debt securities and 17.8% in equities in developed markets.