Invesis chases social housing, power grids, roads
Following a lull in PPPs in Australia as mammoth transport projects ended, PGGM’s Invesis is now finding plenty of growth opportunities in Australia and New Zealand, including backing efforts to solve the countries’ housing crises.
Invesis is set to take part in the close of six Housing Australia Future Fund (HAFF) social housing projects it is financing, according to Simon Hunter (pictured below), the infrastructure investor and developer’s head of Australia and New Zealand.
The greenfield public private partnership (PPP) platform is an exclusive finance partner with two CHPs selected in the HAFF’s first funding round. Five projects will contractually close this year and one in the first quarter of next year, Sydney-based Hunter told this news service. He declined to name the projects.
Invesis is usually an equity investor, but in social housing it uses a managed investment trust to lend subordinated debt to CHPs. This ensures the housing providers do not breach their charitable trust structures, which do not allow CHPs to sell equity in themselves.
Invesis can support the CHPs in future HAFF rounds to build out its long-term social housing portfolio while having equity-like project involvement and governance, Hunter explains.
The investor is also shortlisted alongside co-sponsor Capella Capital, CHP Evolve Housing and builder Hickory for Melbourne’s third Ground Lease Model social housing PPP, this news service reported in July.
In 2023, Invesis partnered with Victorian government agency Homes Victoria and investors Tetris Capital and Aberdeen to deliver more than 1,350 new homes for the second Ground Lease Model project.
Dutch pension fund manager PGGM is Invesis’ single source of capital. Hunter says because its parent wants steady, long-term returns for its pension fund members Invesis can remain a financier for the entire life of a concession — from construction to operations and when it is finally handed back to the government.
“We have that flexibility to adapt to different structures that have a mixed revenue stream. Revenue is derived from both rental payments and an availability payment,” Hunter said.
Under the HAFF framework CHPs take on social housing projects once they reach contractual close. The procurement agency, Housing Australia, gives the CHPs concessional loans, senior debt and availability payments while traditional PPP investors like Invesis loan them subordinated debt.
The federal HAFF program — which involves multiple tenders for tens of thousands of new homes over five years — is a new approach to social housing in Australia introduced by the federal Labor government when it came to power in 2022. This followed years of various much smaller state-run experiments to attract institutional money into the sector that, apart from the Ground Lease model in Victoria, have largely failed.
And while the HAFF is not a traditional PPP project, it has shown Invesis a path to build out its Australian and New Zealand playbook.
“From a PPP perspective, there’s been a pretty light pipeline in the last couple of years if you’re in the Australian market. So on paper, you’re looking at not a huge amount of opportunity but once you get out there and you look at the PPP-like opportunities then market participants are quite busy in new sectors such as housing and renewable energy zones,” he said.
Australasia expansion
Invesis separated from then owner Royal BAM and re-branded in 2022 with a new strategy and the firepower to extend its portfolio. Now an independent long-term investor and developer with more than 50 PPP assets globally, it’s eyeing Australia and New Zealand after gaining a foothold in social housing, health and transport.
It already had a stake in Brisbane’s Cross River Rail from 2019 from when it was with BAM, and post the rebrand is part of the consortium building the new Melton Hospital in Melbourne’s western suburbs under a PPP contract.
It can invest for the full length of a concession, delivering long-term value and active board-level involvement in special purpose vehicles (SPV’s).
“We’re not an investment manager who is raising external capital from third party investors as part of a restricted closed-end fund mandate and is thus subject to timing constraints and having to sell assets to return capital to achieve a target return,” he said.
“We’re one of the few equity investors that can take a tender risk, including bid costs, for a greenfield development risk project and have the investment mandate and focus of being there for the whole concession length and handing back the asset at the end.”
Electricity networks
Other areas it is keen to take part in include the massive electricity grid expansion underway now in Australia to allow the country to switch to renewable power.
Invesis is one of a number of equity investors circling the 10 GW New England Renewable Energy Zone (REZ) project in NSW, for example, and is open to working with a range of co-sponsors, without exclusive alliances, Hunter told this news service.
The company is looking for more core infrastructure PPPs and PPP-like investments across a range of social and economic infrastructure such as roads, rail, tunnels, bridges and marine works, schools, hospitals, courts, correctional facilities and civic buildings, Hunter said.
He noted Invesis’ experience of successfully handing back three assets at the end of their concession: the A59 and N31 motorway PPPs in the Netherlands and the East Ayrshire Community Hospital in Scotland.
Invesis is also willing to partner with co-sponsors on different projects and is not aligned with any one firm for its Australian and New Zealand expansion, he added.
Greater political certainty
Like all infra investors, Hunter followed closely Australia’s federal election in May during which the opposition Liberal/National coalition’s plan to cancel the Labor government’s AUD 10bn HAFF program as well as the AUD 20bn Rewiring the Nation fund that has been underwriting the big electricity network expansion.
Invesis wants repeatable financial and commercial structures to simplify future approvals and deliver projects faster. In the housing sector this would prevent CHPs having to spend a lot of time and effort to get projects built.
When Labor was returned to power in a landslide in May, it gave much needed certainty that there would continue to be federal backing for the massive investments needed to fund new housing and power infrastructure.
Like anyone investing in often government controlled greenfield projects, Hunter is well versed in the short-term nature of politics. For example, he was community infrastructure head at AMP Capital (since acquired by Dexus in 2023) in 2017 when binding bids for New Zealand’s Christchurch social housing PPPs were cancelled by a change of government.
There is now a right-leaning, private investment-friendly government back in power in NZ, albeit the parliament’s short three-year cycle means another election is due by the end of next year.
New Zealand seeks consensus on private finance
New Zealand and Australia have similar investors, builders, contractual and financing structures and plans to boost infrastructure, Hunter notes.
New Zealand is working on a National Infrastructure Plan, which has prioritised 16 projects for investment or investigation. Hunter says the governing Nationals-led coalition want to set expectations and priorities for the next 30 years and get bipartisan support with the Labour opposition for PPPs.
Invesis wants to become a significant investor in New Zealand as well as Australia over time, Hunter says. Globally Invesis has over 120 specialists based in six countries. In Australia it will soon reach five members. Recent hires include an investment director and asset management director.
“I’ve personally attended several roundtable meetings with NZ infrastructure minister Chris Bishop and had the privilege of attending the government-hosted New Zealand Infrastructure Summit in March,” he said.
New Zealand released a PPP framework in November 2024 and held an infrastructure investment summit in Auckland in March to attract international interest.
Bishop told this news service in June it had hired Citi to assess sales of existing and future toll road concessions.
Invesis was aligned with Australia-based builder CPB Contractors and Australian builder Besix-Watpac to bid on the AUD 700m-AUD 800m Christchurch Men’s Prison PPP, but was not shortlisted, as reported.
“It is pleasing to see a strong commitment to attracting foreign capital to support the infrastructure delivery objectives of the current government,” Hunter adds.
“One of the most important questions we’re seeing now is whether there will be bipartisan support for PPP’s, given the previous bipolar political stances on social infrastructure PPPs in particular.”
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