Simplicity chairman Rob Everett and co-founder/ managing director Sam Stubbs have launched InfraKiwi. Photo / Michael Craig
One of New Zealand’s largest KiwiSaver and investment fund management businesses has launched a new company which will raise money to buy completed infrastructure and list on the NZX.
Simplicity chairman Rob Everett and co-founder and managing director Sam Stubbs today announced InfraKiwi, which aims to raise billions to meet demand.
Stubbs has long been a passionate advocate of recommending using KiwiSaver for infrastructure, bemoaning only 30% of the billions in KiwiSaver are currently invested in this country, the other 70% going overseas.
Everett and Stubbs cited the New Zealand Infrastructure Commission’s estimate of a $210 billion infrastructure deficit during the next 30 years.
Water services alone are estimated to need $110b of upgrades, they said.
Capital spending must increase to more than $30b annually by the 2050s to meet expanding demand, they added.
Yet major constraints exist as barriers to supplying more infrastructure.
Those include the Government and local authorities’ debt-to-income ratio, as well as labour.
“A long-term infrastructure plan is absent,” their launch document says.
InfraKiwi will be restricted to New Zealand shareholders, banning foreigners from investing.
Stubbs said Sanford and New Zealand Rural Land Company were NZX-listed entities with foreign investment ownership limits.
Everett said: “We want all Kiwis to have the ability to own this via KiwiSaver or the NZX.”
The InfraKiwi document said: “New Zealand needs a large, long-term focused listed infrastructure company owned by New Zealanders, for New Zealanders. InfraKiwi has the potential to harness the power of KiwiSaver and domestic private investment to own and improve the infrastructure we use.”
Infrastructure Minister Chris Bishop today welcomed InfraKiwi.
“It’s great to see emerging companies like InfraKiwi who plan to invest in our infrastructure.
“As the coalition Government has said, New Zealand is open for business.
“We want investors to deploy capital here that will boost economic growth, lift productivity, grow job opportunities and, ultimately, make all New Zealanders so much better off than we are today.
“Infrastructure investment is a win-win: it’s a great opportunity for investors and a great outcome for Kiwis,” Bishop said.
The infrastructure deficit would not close itself.
“The Government is doing its part by fixing the planning and consenting system, cutting red tape, and investing strongly in infrastructure with more than $61.8b in central government capital investment expected over the next five years.
“It’s clear InfraKiwi wants to play a role in unlocking New Zealand’s potential too, which is very exciting,” Bishop said.
About 3.39 million KiwiSaver members have more than $123.1b invested in 38 schemes.
InfraKiwi intends to supply funds to five sectors:
InfraKiwi has a long-term vision “focused on operational excellence, not financial engineering”.
Everett said the company would own and/or operate infrastructure assets over the long term.
The scheme is to be measured in generations, not years, Everett and Stubbs say.
It will “champion intergenerational fairness and national benefit, aiming to deliver the win-win of sustainable investment returns and reliable infrastructure for all New Zealanders, giving Kiwis a stake in the infrastructure they use every day”.
Simplicity will initially “seed” acquisition of infrastructure assets but then “step away and just be one of the investors” once it was listed, Stubbs said.
“Once we get to $500m or $1b, we will list on the NZX and be included in the NZX 50 index,” Subbs said.
Everett said initial discussions had been held with NZX officials over listing, as well as Infrastructure Minister Chris Bishop, Finance Minister Nicola Willis and other politicians and political parties.
Ownership is envisioned to be “millions of KiwiSaver scheme members and iwi/Kiwi investors”.
The assets had the potential to generate stable inflation-linked returns over time.
InfraKiwi will pay dividends, so the fund would be suited to income-focused investors, the document said.
The NZX listing was to ensure InfraKiwi would be run as “a transparent, trusted, and community-owned investment with the benefits of the NZX regulatory environment”.
Stubbs said 70% of KiwiSaver savings are now invested overseas, with the amount going offshore growing daily because of a lack of local investment opportunities here.
He wants a patriotic turnaround, for KiwiSaver funds to be invested in this country.
In August, Stubbs told the Herald: “What everybody is missing in the infrastructure picture is the opportunity to fund everything domestically. We could arguably plug our entire infrastructure gap without a dollar of foreign money.”
He has been advocating for foreign building expertise but public/KiwiSaver/iwi partnerships to fund them.
Projects could include a second Auckland harbour bridge or a new power station, he said then.
Politicians, local and national, “don’t get it yet” because they haven’t been told of the size of the opportunity or that New Zealand is about to enter “a period of economic renaissance”, Stubbs said.
Everett is the former Financial Markets Authority chief executive.
Simplicity has approximately $9.7b in funds under management.
Companies Office records show InfraKiwi was incorporated on August 18 this year.
Its sole director is Arthur James Kay (Sam) Stubbs.
InfraKiwi is fully owned by Simplicity Investment Management.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.