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OECD/IOPS Global Forum on Private Pensions
Pension Funds and Infrastructure Investments: The Australian Case Ross Jones Deputy Chairman, Australian Prudential Regulation Authority
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Infrastructure initiatives
Positive impact on GDP Mechanisms to facilitate infrastructure investment Tax changes
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Definitions Predictable cash flows Inflation linked
Sustainable competitive advantage Low operating expenses as a percentage of revenue Long operating life ‘Essential service’ with low demand elasticity
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The Australian infrastructure market
5% of assets under management allocated to infrastructure Consideration variation in % Preference for ‘brownfield’ over ‘greenfield’ Preference for regulated entities
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Regulatory concerns Sole purpose test Pension funds as magic pudding
Investment strategy around infrastructure Risk diversification?
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Regulatory concerns Liquidity Valuation
Problems with ‘greenfield’ investment
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Regulatory concerns Governance Joint ventures and partnerships
Political impacts Foreign jurisdictions
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Disclosure principles for listed infrastructure
Key relationships Management and performance fees Related party transactions Financial ratios Capital expenditure and debt maturities Foreign exchange and hedging Base case financial policy Valuations
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The future Matching government and fund expectations
Incentives and their cost
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