Australia is often considered one of the early pioneers of private investment in infrastructure.
The market has come a long way since those days, but there may be signs of another trend emerging in the asset class Down Under that could be replicated worldwide.
Scott Farquhar, one of the co-founders of software company Atlassian, is behind the bid that emerged this week for Genex Energy, via a vehicle known as the Skip Essential Infrastructure Fund. The fund is owned and funded by Skip Capital – the investment fund established by Farquhar and his wife Kim Jackson, who is a former director of the now-defunct Hastings Funds Management – and Stonepeak.
Farquhar isn’t the first Atlassian co-founder to have a go at buying an Australian infrastructure company, never mind the first self-made billionaire.
His colleague Mike Cannon-Brookes has been making headlines for months now thanks to his bid to acquire AGL Energy (alongside Brookfield Asset Management) and to shut down its coal-fired power stations early. That bid ultimately failed, but Cannon-Brookes did succeed in building a stake in the ASX-listed business that was large enough to block its planned demerger, placing his own Grok Ventures investment vehicle in a strong position to guide the development of that country’s renewables portfolio.
Cannon-Brookes is also one of the high-profile backers behind Sun Cable, the fanciful-seeming project to build a giant solar farm in Australia’s Northern Territory that would supply power to Singapore via a super-long undersea cable.
Andrew Forrest, the Western Australia-based iron ore magnate, is another backer of Sun Cable, as well as other wind farm and hydrogen investments through his Squadron Energy business, a subsidiary of his family office, known as Tattarang.
They aren’t the first wealthy people to invest in the asset class, of course. But these Australians – who, it should be noted, are the three richest men in the country by most counts – are pioneering a new approach, at least as we see it: rather than finding a fund to invest in, they are putting their capital to work directly.
It may still be in partnership with another, more experienced investor in the asset class, but it is giving them much more say over what types of investments they pursue and where they do it.
And if the evidence is anything to go by, they aren’t afraid to aim big. The decarbonisation of AGL Energy and the construction of Sun Cable are both huge tasks that have moved significantly closer to reality thanks to the efforts of those backing them (with the caveat that big question marks still hang over the viability of both projects at time of writing).
In that sense, their approach is distinctively different from the growing number of wealthy individuals who are becoming an important source of LP capital for private equity. They also stand apart from top-tier billionaires like Jeff Bezos and Bill Gates, who have created mega-funds to fight climate change via donations to non-profits, in Bezos’ case, and clean tech investments, in Gates’ case.
Australia’s billionaires, then, are activists who have identified energy transition infrastructure as a useful way that they can make a difference with their money.
The GPs who have partnered with them have already sensed the opportunity. It would be no surprise if this is another infrastructure investment trend that gets exported to other countries from Australia.