Wednesday, 21 October 2015

From time to time, we’ve told you about some of the material investments that the Fund has made in private assets, infrastructure, real estate and private equity.  We’ve made many of these investments in Australia but we also have major programs in other developed markets around the world.  International assets that we’ve talked about in the past include our interests in real estate assets such as One Times Square and Chelsea Markets in New York City and in infrastructure assets such as Heathrow and Edinburgh airports in the UK. 

Over time, we’ve also built a material private equity program of approximately $2.3 billion which is allocated across the Balanced, Moderate, Aggressive and Lifetime options^.  The global nature of the portfolio is shown in the chart below and reflects the fact that North America and Europe are two of the most developed markets for private equity investment. 

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Similarly, our primary investment manager in this asset class, Partners Group, has a vast global presence.  Partners Group has a home base in Zug, Switzerland but its 780 employees are located in 18 offices globally so that they can be resident in the markets in which they seek to invest on our behalf. 

Occasionally we are given an opportunity by Partners Group, to take extra capacity in a deal at a substantially reduced fee.  The industry often refers to this type of opportunity as “co-investment”.  This helps Partners Group close the deal efficiently with clients they know well rather than with third parties and gives us a better value for money proposition for the benefit of our members. 

The most recent of these transactions was an investment that Partners Group made in KinderCare, the largest and most diversified for-profit provider of early childhood education in the US.  KinderCare operates across three distinct brands with approximately 1,900 locations in 39 states and the District of Columbia.  The company caters to a wide range of learners – from infants and toddlers to primary/secondary school students and adult learners.

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More than 65 per cent of KinderCare’s learning centres are nationally accredited compared to the US national average of 8 per cent of licensed centres and it has more accredited centres than the next five largest for-profit competitors combined. 

Partners Group has significant experience in the education business and has chosen this company based on:

  • Market leadership in a highly fragmented marketplace
  • Strong management team
  • Positive underlying macro trends including birth rates, women in the workforce and low unemployment
  • Bi-partisan government support in the US for legislation increasing government assistance for child care.

Partners Group controls the majority equity stake in the company on behalf of its clients, including QSuper’s equity interest which represents a minority ownership stake.

If you have any questions about QSuper’s unlisted assets, please let me know.

^ Visit our investment options section for more detailed information. Changes to inflation, fees, asset allocations, option objectives, and risk, play a significant part in the return of any investment option.

The views of the author and those who provide the responses to comments posted on this blog are not necessarily the views of the QSuper Board. We’ve put this information together as general information only and you should get professional advice before relying on this information.

Past performance is not a reliable indicator of future performance. Each of our investment options has a different objective, risk profile, and asset allocation.