new models for infrastructure financing : the role of - s3 - raffaele...lti project – partners...
TRANSCRIPT
New models for Infrastructure Financing : the Role of
Institutional Investors 6th Annual Meeting of senior PPP officials, OECD, Paris - April 15th 2013
Raffaele Della Croce
Lead Manager - Long Term Investment project
Directorate for Financial and Enterprise Affairs
OECD [email protected]
1. The Institutional Investors landscape
2. Institutional Investors and Infrastructure
3. Infrastructure models
4. The OECD project on Long Term Investment
Contents
2
Institutional Investors
landscape
The Demand for Long Term Assets
3
Institutional investors in the OECD
4
0.0
5.0
10.0
15.0
20.0
25.0
30.0
US
D t
tril
lio
ns
Investment funds
Insurance companies
Pension funds
Other (1)
USD28.8 tn
USD24.3 tn
USD20.2 tn
USD1.8 tn
Source: OECD
Inst Investors AUM have been growing to USD 71tr AUM in OECD
countries
Assets held by Institutional Investors in the OECD area, 1995-2011
Asset Allocation Asset Allocation of Pension funds and Insurers in selected
OECD countries, 2011 As a % of total investment
Institutional Investors Landscape
6
New investment and risk management strategies
Derisking: LDI, buy-in, buy-out
Long-term investing
Investment beliefs are changing
Reassessing risk Reconsidering future
expected returns
The recent environment
‘Lost investment decade’ New accounting and
solvency rules
Infrastructure Investment
How much is invested?
7
Australia /NZ & Asia
AustralianSuper - Australia
Unisuper - Australia
SunSuper - Australia
Future Fund – Australia
New Zealand Superannuation Fund – New Zealand
Goverment Pension Investment Fund – Japan
National Pension fund – Korea
National Social Security Fund - China
North America
Ontario Municipal Employees’ Retirement System (OMERS) - Canada
Canada Pension Plan Investment Board (CPPIB) - Canada
Ontario Teachers Pension Plan (OTPP) – Canada
Socila Security Trust Fund -USA
Europe
Zilverfonds –Belgium
ATP – Denmark
PFA –Denmark
Pension Reserve Fund – France
AGIRC-ARRCO –France
National Pen Res Fund –Ireland
Fonchim –Italy
Cometa –Italy
ABP -Holland
PFZW - Holland
PMT - Holland
Central & South America
Sustainability Guarantee Fund –Argentina
Banco do Brasil Employee Pension Fund (PREVI) - Brazil
Pension Reserve Fund – Chile
AFP Provida – Chile
AFP Horizonte – Colombia
Bancomer Afore – Mexico
IMSS Reserve – Mexico
AFP Horizonte –Peru
Governmenr Pension Fund Global –Norway
Demographic Reserve Fund –Poland
Social Security Stabilisation Fund – Portugal
BPI – Portugal
Social Security Reserve Fund –Spain
Caja Madrid –Spain
Endesa –Spain
Fonditel –Spain
Ap1-Ap6 –Sweden
University Superann. Scheme (USS) -UK
BT Pension Scheme - UK
8
Infrastructure Investment
..Investors for more than US$6tr AUM spread
across regions
South Africa Government Employees Pension fund of South Africa (GEPF)
OECD Large Pension Funds
Survey 2011..
Infrastructure Investment
9
OECD Large Pension Funds Survey 2011: Infrastructure as
an alternative asset?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Debt and Structured products Equity Cash Alternative & Other
10
OECD Large Pension Funds Survey 2011: what is infrastructure?
Name of the fund CountryTot Assets
USD million
Unlisted
Equity
Listed
Equity
Fixed
IncomeTotal
OMERS Canada 52,385 15.5 0.0 0.0 15.5
ABP Netherlands 312,257 0.3 n.a. n.a. 0.3
Future Fund Australia 65,824 4.1 na na 4.1
GEPF South Africa 138,572 0.1 n.a. 0.2 0.3
Previ Brasil 88,847 0.0 13.5 n.a. 13.5
AFP Provida Chile 40,474 0.0 0.2 1.4 1.5
Afore Bancomer Mexico 16,430 0.0 2.1 0.5 2.6
COMETA Italy 7,484 0.0 2.2 1.5 3.7
AFP Horizonte Perú 7,162 0.3 3.0 7.4 10.7
Banco BPI Portugal 3,114 0.0 10.2 10.6 20.0
Infrastructure Investment % of total assets
Source: OECD Working Paper Trends in Large Pension Fund Investment in Infrastructure Nov 2012
Trends in Infrastructure
Infrastructure Investment
11
Sources: OECD Large Pension Funds Survey 2011
USD millionAs % of Total Assets
Infrastructure Survey*
As % of Total Assets -
Complete Survey**
Unlisted Equity 37,961 2.6% 0.6%
Fixed Income 3,920 0.3% 0.1%
Total Infrastructure Investment 41,881 2.9% 0.7%
OECD Large Pension Funds Survey 2011: how much is invested?
Infrastructure models
Old vs new models
12
Infrastructure Investing
Equity
• Direct/Co-Investments
• Listed Funds
• Unlisted funds (Standard model vs new model)
• Funds of funds
Debt
• Wrapped vs unwrapped bonds
• Partnerships with banks
• Mezzanine structures
• Debt funds
13
Different options to access infrastructure..
Infrastructure Investing
14
Direct / co-investment
• Club Format for core infra assets/brownfeld deals
• Pledge funds
Jointly-owned
specialist • Aligned
governance (e.g. IFM in Australia, Invespar in Brazil, UK PIP)
Public / Private funds
• European market Marguerite fund
• Greenfield funds in high growth countries
New models/strategies to access infrastructure
Infrastructure Investing
15
Risk
Return
Core, value added
and opportunistic
Senior/Junior debt
Infrastructure Equity
Infrastructure Debt
Infrastructure as an asset class
•absolute return or
liability matching
•size of investors
•debt as real estate
debt
16
Infrastructure Investing
Equity 20-25%
Senior debt
55-70%
Mezz 10-20%
”No” down side,
No up side
Low stable
returns
No control, equity
like risk, higher
returns
Control, full risk Issues to consider for
pension funds:
1)Is control of
characteristics important,
2)Nominal vs. risk adjusted
returns,
3)Protecting down side vs.
not selling up side,
4)Ability to influence
business development
Example of Infrastructure capital structure
THE OECD Long Term
Investment Project
An holistic approach to the barriers to long term investment
17
OECD LTI Project - Structure
Structure: Modules
Data Collection on Institutional
Investors
Governance
Infrastructure Investment
Regulation
Emerging Markets
Financing
Data Collection
Policy Analysis
Events
Deliverables
• Institutional Investors expertise
• Data collection national level
• Other work from OECD departments (ENV., Eco etc..)
• Interaction investors/policy makers –high level
OECD added value
LTI Project – Partners & Participants
• Partners: APG, Canadian Pension Plan Investment Board, Long-Term Investors Club (members of the project Steering Committee)
• Participants: APG, ATP, BT, Calpers, CDC, CIC, CPPIB, Future Fund, NZ Superannnuation Fund, GIC, Norway Gov. Pension Fund – Global, PensionDanmark, PGGM, Previ, South Africa GEPF, AustraliaSuper, TIAA-CREFF, UN, USS…
19
The project’s success depends on the involvement of asset
owners…
Long-Term Investment
Project
OECD LTI Project – 2012-3 Events
20
OECD Forum
Paris
May 2012
G20/OECD
Green Growth
Conference
Paris
May 2012
APEC – Indonesia
August 2013
ADB/OECD /ICC
Workshop on
bankability of PPPs
Feb 2013
OECD/IOPS
Private Pensions
Global Forum
Conference – Chile
Oct 2012
Launch Event
Paris
February 2012
G20/OECD
LTI Roundtable
Paris
28 May 2013
Feb 2012
LAUNCH
2013
OECD/ Euromoney
Infrastructure financing
Summit
29 May 2013
LTI Project – G20 Milestones 2012-3
• G20/OECD Note on Pension Fund Financing for Green Infrastructure and Initiatives (June 2012)
• Principles on Long-Term Investment by Institutional Investors (Sep 2013)
• Questionnaire on large pension funds (Sep 2013)
• Report on government and market incentives for LTI / infrastructure investment (2013)
21 www.oecd.org/finance/lti