Partners Group consortium seals Australia PPP rail project

Other consortium members include Hong Kong's MTR Corporation, Australia's Leighton Contractors, John Holland, UGL Rail Services and Plenary Group, a specialist PPP infrastructure investor. Benjamin Haan, managing director in Partners Group's private infrastructure team, will join the project company's board of directors.

The project involves the construction, financing and operation of a 36-kilometer rapid transit train network - the first in Australia to be fully automated, according to a release. Running from Sydney's North Shore to the northwestern suburbs, it will feature 15 kilometers of twin tunnels, eight new railway stations and 4,000 commuter car parking spaces. Exiting railways lines will also be upgraded.

The project is expected to come into operation by 2019 and the operating concession for train services runs for 15 years. The New South Wales state government has agreed to make a significant capital contribution during the construction phase.

Speaking to AVCJ in August, Haan said that in the current climate of highly contested and highly priced large-scale brownfield infrastructure privatizations in Australia, Partners Group favors existing projects in the small and mid-cap space and new builds in areas such as urban rail services, renewable energy and social infrastructure. It works with long-term institutional investors on these deals.

One of the reasons greenfield projects are accessible is the lack of competition. Superannuation funds and various offshore investors are piling into brownfield assets but they remain wary of greenfield projects due to: uncertainty over government commitment; insufficient specialist expertise; sovereign and political risk; regulatory pressures; a lack of suitably structured projects; complex bidding processes; and greenfield project risk.

"Everyone talks about filling the infrastructure gap in terms of funding the build-out of new assets and it's a good byline, but we haven't seen too many examples of direct participation in greenfield PPPs by Australian super funds in recent years," Haan said. "However, the super funds are consolidating and building up direct teams of their own so I expect it to happen more in the future."

The process could be facilitated by making it easier for the superannuation funds to participate. One option is for state governments to underwrite a portion of the demand risk in order to get investors on board and then exit via a refinancing a few years down the line, once the asset is up and running.

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• Topics
• Infrastructure
• Infrastructure
• Australasia
• Australia
• Infrastructure
• Partners Group
• Transportation