Investing in APAC infrastructure
Ontario Teachers' Head of Infrastructure in Asia Pacific (APAC) shares his perspective on opportunities in the region and the importance of being agile and flexible
In a recent story in Infrastructure Investor magazine, Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources, sat down with the publication to discuss Ontario Teachers’ Infrastructure strategy in APAC, including its long-term commitment to the region, its agile investment approach and its recent investment in New Zealand's mobile towers.
Investing in the region's dynamic economy over the long term
One of Ontario Teachers' earliest investment in the APAC region was the Sydney Desalination Plant in Australia, with a 50% stake acquired in 2012, later increasing to 60% in 2020. In that same year, Ontario Teachers’ set up an APAC infrastructure team, led by Crane, in its recently opened Singapore office. "One of the reasons we opened a Singapore office [in 2020] was to set up an infrastructure group in the region with the idea that we would have a team based in Singapore that would be APAC-focused – not only focusing on Australia and New Zealand, but also India, Southeast Asia and North Asia,” Crane says. With offices in Hong Kong, Singapore and most recently Mumbai, Ontario Teachers' is now strategically placed among some of the most dynamic economies in APAC.
A 'one-size doesn't fit all' agile investing strategy
An important element in Ontario Teachers’ Infrastructure strategy is the ability to remain agile and flexible. “It’s recognizing that one size doesn’t fit all, with different sectors for different countries, and slightly different entry points or platform strategies, as well,” Crane says.
It’s also a strategy likely to withstand today’s uncertain macroeconomic and geopolitical landscape. “We’re not naïve to the global challenges that are going on, but there are always challenges and the current set of challenges are ones that, if anything, highlight the importance of infrastructure versus other asset classes.”
Scaling new heights with mobile communication towers
With the recent acquisition of New Zealand’s 2degrees Mobile's passive mobile telecommunications tower portfolio – consisting of 1,124 mobile towers across the country – and a 70 per cent stake in Spark New Zealand’s passive mobile tower infrastructure assets, Ontario Teachers’ have made their first investments into mobile towers.
“It wasn’t a sector that we had invested in within the infrastructure class previously,” says Crane. “We had done data centres out of different asset classes but nothing within the infrastructure space. As this asset class has progressed towards a more typical infrastructure-like risk return, it became something that was more and more attractive to the infrastructure group.
“Of the broader telecom infrastructure sector, towers were the area that was deemed most attractive to us as investors and, as part of that, two geographies stood out. One was Australia and New Zealand, given the contract structuring, and the other region was the Americas.”
Four key areas of focus to date
The company's infrastructure team in APAC has been investing in four areas: regulated utilities, roads, renewables, and telecommunications. But, in a further refinement, it has been pinpointing its focus on those segments in specific geographies. That means, in India, Ontario Teachers' has been focusing on roads and renewables, while in Australia and New Zealand, the company has been focusing on regulated utilities and telecoms, and in Southeast Asia, all four sectors. As for North Asia, the emphasis has been on renewables at the development stage.
There is a particular interest in India, where Ontario Teachers’ opened its Mumbai office last year: “While Australia and New Zealand are about large one-off investments, India’s all about platforms that can continue to grow,” Crane says. “That will continue to be a strategy that we will focus on in India.”