A survey of major global and Australian investors by Infrastructure Partnerships Australia (IPA) and Perpetual has revealed there is a significant amount of money available to invest in Australian infrastructure, but more work is required to capture it.

The first study of its kind in Australia, the IPA Perpetual Australian Infrastructure Investment Report was created to better understand the appetite for investment in Australian infrastructure. While 95 per cent of infrastructure investors are likely to invest in Australian opportunities in the near future, the report uncovered some significant barriers to entry.

IPA Chief Executive Brendan Lyon said: “This is the most detailed analysis of infrastructure investors ever done and offers compelling insights for political and business leaders in this country.

“Our research shows a strong appetite for Australian infrastructure projects – with skilled investors wanting to write big cheques for Australian infrastructure. However, the report also shows we need to dial up the number of projects and dial down the political risk.”

More than two thirds of investors (68 per cent) cited political risk as their greatest concern in the Australian market.

“Australia is rightly regarded as one of the most stable and secure places for infrastructure investment, but the cancellation of Victoria’s East West Link and Queensland’s asset sales have clearly spooked many investors,” Mr Lyon continued.

Despite the challenges cited by research participants which included sovereign wealth funds, pension funds, fund managers, developers, banks and insurance companies, Andrew Cannane, General Manager of Corporate Client Services, Perpetual Corporate Trust said Australia’s strong track record and mature market make Australia an attractive destination for infrastructure investment.

“Our clients have remarked they would prefer to buy an Australian port servicing China than a Chinese port because of the transparency, maturity and stability of our market and proven ability to get money in and out,” Mr Cannane said.

Half of the survey’s respondents said they were ready to invest more than A$1 billion in any one project, with 36 per cent saying they were ready to invest more than A$2 billion.

“There is a significant weight of capital ready to be deployed into local infrastructure. Many foreign investors have set up local offices to compete for available assets. However, we need to increase the visibility of future projects and the value they can provide, to increase investment in the Australian market,” Mr Cannane continued.

Nearly half (42 per cent) of the investors surveyed said they believe the Australian market is unlikely to provide sufficient opportunities in the near term.

“These insights suggest there is a net-negative sentiment among investors about the depth of the pipeline, with most thinking Australia will have too few infrastructure investments, for the scale of investment seeking exposure to Australian assets,” said Mr Lyon.

“This research confirms finance is not the problem. There is a wall of money wanting to invest in Australia, we just need to get the structures right,” he said.

Source: Perpetual and Infrastructure Partnerships Australia

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