Australian pension fund buys $660mn stake in European mobile towers

Australia’s universities pension fund has taken a A$1bn ($680mn) stake in Vodafone’s former mobile towers business Vantage, as more “superfunds” look to Europe for investment opportunities.

UniSuper — a A$115bn fund which will hold a 5 per cent stake in Vantage Towers — joins Vodafone, KKR, Saudi Arabia’s Public Investment Fund and activist Elliott Management as shareholders in one of Europe’s largest masts businesses, covering 10 countries.

The deal is the latest sign that Australia’s growing superannuation industry — the world’s fifth-largest pension system at A$3tn — is looking outside its home market for growth.

Another major superannuation fund, Aware Super, opened an office in Europe last year and said it would invest A$16bn there and in the US over the next three years. AustralianSuper, Australia’s largest pension fund, with stakes in the King’s Cross and Canada Water property developments in London, plans to spend £23bn in Europe and the US in the next five years.

UniSuper is an active investor in Australian infrastructure. It backed the A$23.6bn consortium that took Sydney Airport private last year, rolling its stake into the unlisted vehicle in one of the country’s largest ever deals. It is also the largest shareholder in toll road operator Transurban Group.

The Vantage Towers deal, however, represents one of its most significant moves overseas, as superfunds look for opportunities to geographically diversify their investments. It is the university fund’s first direct unlisted infrastructure investment overseas.

Sandra Lee, UniSuper’s head of private markets, said it would work with KKR and other shareholders to deliver on Vantage’s strategy.

“This is a high-quality defensive infrastructure investment with strong fundamentals and growth prospects. It adds to UniSuper’s approximately $15bn private markets portfolio and is positioned to deliver excellent results for our members over the long term,” Lee said in a statement.

Alex Dunnin, director of research at Rainmaker Information, said the move to tap into telecoms infrastructure would diversify its position in private markets where it is exposed to unlisted office property. 

“Given the performance track record of this asset class, it’s no surprise UniSuper has looked to enhance its private markets portfolio,” he said.

Mobile towers have become a focus for infrastructure investors in recent years as telecoms companies have sold off the steel masts — which carry mobile radio equipment but can also generate predictable cash flows due to long-term leasing contracts — to free up funds to invest in network upgrades.

Vodafone carved out Vantage Towers to unlock value on its balance sheet. It floated the Düsseldorf-based company two years ago, keeping a majority stake in an effort to retain exposure to the value created by consolidation of the sector.

Vodafone moved to delist Vantage and sold 50 per cent of the tower company to KKR, Global Infrastructure Partners and PIF last year to reduce its debt. Separately, Elliott acquired 5.6 per cent of Vantage’s voting rights in February.