1 00:00:03,930 --> 00:00:06,510 Sean Aylmer: Welcome to the Fear and Greed daily interview. I'm Sean 2 00:00:06,510 --> 00:00:09,599 Sean Aylmer: Aylmer. It's always fascinating seeing what the big super funds 3 00:00:09,599 --> 00:00:13,020 Sean Aylmer: are doing with their members' money. UniSuper is one of 4 00:00:13,020 --> 00:00:17,369 Sean Aylmer: Australia's largest funds, investing more than $ 115 billion on behalf 5 00:00:17,699 --> 00:00:22,079 Sean Aylmer: of about 620,000 members. They've recently announced a one billion 6 00:00:22,079 --> 00:00:25,919 Sean Aylmer: dollar investment into mobile towers in Europe. I wanted to 7 00:00:25,920 --> 00:00:29,219 Sean Aylmer: talk to UniSuper about the investment, about why infrastructure is so 8 00:00:29,219 --> 00:00:31,979 Sean Aylmer: important for a big super fund and how they go 9 00:00:31,980 --> 00:00:35,279 Sean Aylmer: about finding global assets that represent good value for their 10 00:00:35,279 --> 00:00:39,450 Sean Aylmer: members. Sandra Lee is head of private markets at UniSuper. 11 00:00:39,510 --> 00:00:40,890 Sean Aylmer: Sandra, welcome to Fear and Greed. 12 00:00:41,310 --> 00:00:42,810 Sandra Lee: Thanks Sean. Thanks for having me. 13 00:00:43,290 --> 00:00:45,690 Sean Aylmer: We don't normally talk about a person's job title, but 14 00:00:45,690 --> 00:00:48,928 Sean Aylmer: given you're head of private markets, it is worth taking 15 00:00:49,110 --> 00:00:53,010 Sean Aylmer: the very first step and explaining what private markets are 16 00:00:53,010 --> 00:00:56,610 Sean Aylmer: all about, because many people listening to us hear us 17 00:00:56,610 --> 00:00:59,940 Sean Aylmer: going on about fixed income and bond markets and equities 18 00:00:59,940 --> 00:01:03,690 Sean Aylmer: and that type of thing. Where do private markets fit in? 19 00:01:04,110 --> 00:01:07,889 Sandra Lee: Absolutely. Firstly, I lead the private markets team here at 20 00:01:07,889 --> 00:01:10,440 Sandra Lee: UniSuper, and what that means is it's a business that 21 00:01:10,440 --> 00:01:15,270 Sandra Lee: incorporates both infrastructure investments and private equity. And you hear 22 00:01:15,270 --> 00:01:18,390 Sandra Lee: the word private a lot. That's because I work in 23 00:01:18,390 --> 00:01:22,440 Sandra Lee: investments that relate to unlisted investments as opposed to listed 24 00:01:22,440 --> 00:01:23,790 Sandra Lee: investments on the stock market. 25 00:01:24,420 --> 00:01:28,949 Sean Aylmer: And so for most retail investors, and many institutional investors 26 00:01:28,949 --> 00:01:32,789 Sean Aylmer: too, the only way actually to access that sort of 27 00:01:32,790 --> 00:01:37,380 Sean Aylmer: investment is via big fund managers like superannuation funds or 28 00:01:37,380 --> 00:01:38,160 Sean Aylmer: other providers. 29 00:01:38,639 --> 00:01:42,330 Sandra Lee: Absolutely. It's very difficult for retail investors to access unlisted 30 00:01:42,330 --> 00:01:44,578 Sandra Lee: investments because they tend to be a really large scale 31 00:01:45,420 --> 00:01:49,470 Sandra Lee: and you really needing fund managers or institutional investors like 32 00:01:49,470 --> 00:01:52,200 Sandra Lee: a big super fund to be invested in these sorts 33 00:01:52,200 --> 00:01:52,950 Sandra Lee: of investments. 34 00:01:53,190 --> 00:01:57,240 Sean Aylmer: Yep. Okay. So that's where private markets fits in. Infrastructure 35 00:01:57,240 --> 00:01:59,610 Sean Aylmer: is part of that. We all hear a lot about 36 00:01:59,610 --> 00:02:04,139 Sean Aylmer: super funds taking stakes in infrastructure projects. Why does Super 37 00:02:04,139 --> 00:02:05,670 Sean Aylmer: like infrastructure so much? 38 00:02:06,359 --> 00:02:11,460 Sandra Lee: We like infrastructure because it's large scale projects and they 39 00:02:11,460 --> 00:02:15,719 Sandra Lee: tend to exhibit a lot of defensive characteristics. And what 40 00:02:15,719 --> 00:02:18,840 Sandra Lee: we mean by defensive is they're resilient. They tend to 41 00:02:18,840 --> 00:02:23,639 Sandra Lee: provide our members and our investors long- term stability. And 42 00:02:23,639 --> 00:02:27,630 Sandra Lee: why we like it unlisted as well is because there's reduced 43 00:02:27,630 --> 00:02:31,859 Sandra Lee: volatility compared to holding infrastructure from a list of perspective. 44 00:02:32,970 --> 00:02:38,280 Sean Aylmer: So reduced volatility long term, you spent a billion dollars 45 00:02:38,340 --> 00:02:43,350 Sean Aylmer: taking a stake ain Vantage Towers. Why mobile towers? Well, tell 46 00:02:43,350 --> 00:02:45,570 Sean Aylmer: us about Vantage Towers to begin with and then why 47 00:02:45,570 --> 00:02:46,320 Sean Aylmer: mobile towers? 48 00:02:47,220 --> 00:02:50,970 Sandra Lee: Yeah, absolutely. So Vantage Towers is one of Europe's largest 49 00:02:50,970 --> 00:02:55,769 Sandra Lee: mobile towers businesses. It operates in 10 different markets or countries. 50 00:02:56,070 --> 00:03:01,410 Sandra Lee: As infrastructure investors, we like mobile towers because they facilitate 51 00:03:01,860 --> 00:03:05,520 Sandra Lee: obviously the use of mobile phones and, as you know, 52 00:03:06,000 --> 00:03:09,660 Sandra Lee: data is becoming a global thematic. We need more data 53 00:03:09,660 --> 00:03:12,599 Sandra Lee: as we talking to one another and streaming sort of 54 00:03:12,599 --> 00:03:16,020 Sandra Lee: movies and music. So it's essential part of day- to- 55 00:03:16,020 --> 00:03:19,560 Sandra Lee: day life. And from our perspective, it's core infrastructure. 56 00:03:20,280 --> 00:03:23,820 Sean Aylmer: So who did you buy it off? And this is something, 57 00:03:23,820 --> 00:03:29,010 Sean Aylmer: this sort of infrastructure project, towers, presumably there's kind of 58 00:03:29,010 --> 00:03:30,299 Sean Aylmer: a growth industry, I suppose. 59 00:03:33,179 --> 00:03:38,160 Sandra Lee: Yeah, absolutely it is. As the global data demand increases, people are investing 60 00:03:38,160 --> 00:03:41,610 Sandra Lee: more and more into mobile towers because everyone's on their 61 00:03:41,610 --> 00:03:45,929 Sandra Lee: mobile nowadays. So from our perspective, it's defensive, it's resilient 62 00:03:45,929 --> 00:03:50,700 Sandra Lee: type of investments, and it's, as I said, very core infrastructure. 63 00:03:51,000 --> 00:03:52,829 Sean Aylmer: Stay with me, Sandra, we'll be back in a minute. 64 00:03:59,130 --> 00:04:01,650 Sean Aylmer: My guest this morning is Sandra Lee, head of private 65 00:04:01,650 --> 00:04:06,539 Sean Aylmer: markets at UniSuper. So UniSuper, am I right in saying you 66 00:04:06,540 --> 00:04:09,449 Sean Aylmer: haven't done a lot of investing in Europe? Is that 67 00:04:09,450 --> 00:04:11,549 Sean Aylmer: right? And if that's the case, why this time? 68 00:04:12,029 --> 00:04:17,279 Sandra Lee: Yeah, no, absolutely. We have invested in Europe, but via our global listed 69 00:04:17,850 --> 00:04:21,299 Sandra Lee: portfolio. So we have listed shares, but why we sort 70 00:04:21,300 --> 00:04:24,149 Sandra Lee: of had a little bit of a media on this 71 00:04:24,150 --> 00:04:29,100 Sandra Lee: one is because it's the first unlisted, large scale infrastructure 72 00:04:29,100 --> 00:04:30,150 Sandra Lee: investment into Europe. 73 00:04:30,629 --> 00:04:34,200 Sean Aylmer: So why do it? What's the reasoning behind? I get 74 00:04:34,200 --> 00:04:37,080 Sean Aylmer: your reasoning, but it's kind of must be slightly scary 75 00:04:37,080 --> 00:04:38,969 Sean Aylmer: going into a whole new geography. 76 00:04:39,480 --> 00:04:43,169 Sandra Lee: Absolutely. For us, we're very opportunistic investors, so we look 77 00:04:43,170 --> 00:04:48,000 Sandra Lee: at how we can access quality investments at attractive pricing. 78 00:04:48,480 --> 00:04:51,660 Sandra Lee: So this came about through UniSuper's contact with some of 79 00:04:51,660 --> 00:04:55,230 Sandra Lee: the large institutional fund managers, in this case KKR, a 80 00:04:55,230 --> 00:04:58,529 Sandra Lee: big US private equity firm. So they brought the deal 81 00:04:58,529 --> 00:05:02,759 Sandra Lee: to us. They had a partnership deal with Vodafone. It 82 00:05:02,759 --> 00:05:06,209 Sandra Lee: was very opportunistic and we liked it. And we've got 83 00:05:06,209 --> 00:05:10,169 Sandra Lee: strong partners that will invest alongside UniSuper, including KKR. 84 00:05:11,370 --> 00:05:15,270 Sean Aylmer: Okay. So you invested with... When you started talking about 85 00:05:15,270 --> 00:05:19,229 Sean Aylmer: private equity there, as an investor looking at these mega 86 00:05:19,230 --> 00:05:22,919 Sean Aylmer: deals, are there some people you like to buy with 87 00:05:22,920 --> 00:05:24,779 Sean Aylmer: and don't like buying from? 88 00:05:26,370 --> 00:05:30,120 Sandra Lee: Yeah, look, I think that's a fair question, Sean. We 89 00:05:30,120 --> 00:05:34,559 Sandra Lee: like to align ourselves with a co- investor that sort 90 00:05:34,559 --> 00:05:38,729 Sandra Lee: of shares similar objectives to UniSuper. We are long- term 91 00:05:38,759 --> 00:05:42,089 Sandra Lee: institutional investors, so we don't like going in for two 92 00:05:42,089 --> 00:05:46,320 Sandra Lee: years and then flipping the investment because we like growing 93 00:05:46,320 --> 00:05:50,580 Sandra Lee: the business with like- minded investors, and KKR has got 94 00:05:50,580 --> 00:05:53,639 Sandra Lee: a very long- term infrastructure fund as well, so they 95 00:05:53,639 --> 00:05:57,030 Sandra Lee: share a lot of similarities to our investment model. 96 00:05:57,900 --> 00:06:03,029 Sean Aylmer: Okay. So what other infrastructure assets globally are you invested 97 00:06:03,029 --> 00:06:04,350 Sean Aylmer: in or looking at? 98 00:06:06,089 --> 00:06:10,140 Sandra Lee: Yeah, we've got another global, US- based toll road. So 99 00:06:10,230 --> 00:06:14,909 Sandra Lee: that's an investment called Transurban Chesapeake within the greater Washington 100 00:06:14,910 --> 00:06:18,479 Sandra Lee: area in the US. Municipal bought that from Transurban a 101 00:06:18,930 --> 00:06:22,620 Sandra Lee: couple of years ago, so that's, again, quite core infrastructure 102 00:06:22,620 --> 00:06:23,190 Sandra Lee: for us. 103 00:06:23,760 --> 00:06:27,060 Sean Aylmer: Okay. You've also got airports. That's local though, isn't it? 104 00:06:27,240 --> 00:06:32,039 Sandra Lee: We've got a large unlisted airports portfolio, including Sydney Airport, 105 00:06:32,490 --> 00:06:35,940 Sandra Lee: half of the Adelaide Airport and Brisbane airport. So you 106 00:06:35,940 --> 00:06:40,050 Sandra Lee: may have seen in the press Sydney airport was listed 107 00:06:40,110 --> 00:06:43,830 Sandra Lee: before. About a year and a half ago, we joined 108 00:06:43,830 --> 00:06:46,828 Sandra Lee: a consortium, or rather the consortium invited us to be 109 00:06:46,830 --> 00:06:49,558 Sandra Lee: a part of the take private, so Sydney airport was 110 00:06:49,559 --> 00:06:55,200 Sandra Lee: essentially delisted. UniSuper is Sydney Airport's largest shareholder, but we wanted 111 00:06:55,200 --> 00:06:59,609 Sandra Lee: to stay in the asset even after it became unlisted. So we 112 00:06:59,610 --> 00:07:03,809 Sandra Lee: basically flipped our equity from listed Sydney airport to unlisted 113 00:07:03,809 --> 00:07:04,920 Sandra Lee: Sydney airport shares. 114 00:07:05,219 --> 00:07:08,580 Sean Aylmer: Yeah. And I remember your support was very vital for that 115 00:07:08,580 --> 00:07:12,120 Sean Aylmer: deal. How has Sydney Airport performed since it's gone private? 116 00:07:12,570 --> 00:07:15,660 Sandra Lee: From our perspective, it's performed well, but for all airports, 117 00:07:15,900 --> 00:07:19,650 Sandra Lee: not just in Australia but across the globe, obviously suffered 118 00:07:19,650 --> 00:07:23,970 Sandra Lee: heavily during Covid when countries and borders were locked down. 119 00:07:24,300 --> 00:07:26,639 Sandra Lee: So fair to say, the last year and a half 120 00:07:26,639 --> 00:07:30,809 Sandra Lee: has been a good recovery for airports across the globe, 121 00:07:31,289 --> 00:07:34,920 Sandra Lee: and Sydney Airport's had a strong rebound as well, and 122 00:07:35,220 --> 00:07:39,330 Sandra Lee: we can see international traffic recovering pretty strongly at Sydney Airport. 123 00:07:39,900 --> 00:07:44,070 Sean Aylmer: Okay. Now, another asset in the portfolio is forestry, which 124 00:07:44,070 --> 00:07:46,770 Sean Aylmer: I've got to say I know nothing about. What is 125 00:07:46,770 --> 00:07:49,410 Sean Aylmer: it? What do you like about forestry, timber, plantations, that 126 00:07:49,410 --> 00:07:49,980 Sean Aylmer: type of thing? 127 00:07:51,150 --> 00:07:54,960 Sandra Lee: Yeah, from our perspective, forestry sort of behaves quite defensively 128 00:07:54,960 --> 00:08:00,389 Sandra Lee: like how infrastructure investments actually perform. So they tend to 129 00:08:00,389 --> 00:08:03,839 Sandra Lee: be long- term assets, right? Because the world's pretty short 130 00:08:03,839 --> 00:08:07,080 Sandra Lee: of fiber, and as you know, you need a lot 131 00:08:07,080 --> 00:08:10,140 Sandra Lee: of quality wood for your construction industry as well. So 132 00:08:10,140 --> 00:08:13,590 Sandra Lee: UniSuper has got a growing portfolio to forestry assets. We 133 00:08:13,590 --> 00:08:17,280 Sandra Lee: have a big asset here in Victoria called Hancock Victorian 134 00:08:17,280 --> 00:08:20,940 Sandra Lee: Plantations and two other forestry assets in New Zealand. And 135 00:08:20,940 --> 00:08:24,030 Sandra Lee: the New Zealand ones tend to be exported, so they 136 00:08:24,600 --> 00:08:28,830 Sandra Lee: supply the Chinese market, but also the domestics that are 137 00:08:28,830 --> 00:08:32,340 Sandra Lee: market in New Zealand. Ultimately, we like the global thematic 138 00:08:32,340 --> 00:08:36,240 Sandra Lee: around the worlds that are becoming short in fiber. You 139 00:08:36,240 --> 00:08:40,830 Sandra Lee: need packaging, you need paper, and wood is sustainable, so 140 00:08:40,830 --> 00:08:43,860 Sandra Lee: we light that particular aspect of it as well. And we 141 00:08:43,860 --> 00:08:46,890 Sandra Lee: think going forward there's carbon credit optionality. 142 00:08:47,760 --> 00:08:50,040 Sean Aylmer: Okay. So I'll come to the carbon credit optionality in a 143 00:08:50,040 --> 00:08:52,260 Sean Aylmer: moment, which is really interesting, but everything that you've been 144 00:08:52,260 --> 00:08:58,828 Sean Aylmer: talking about, so mobile phone towers and forestry and infrastructure, 145 00:08:59,458 --> 00:09:02,700 Sean Aylmer: they really are of the same ilk, aren't they? You 146 00:09:02,700 --> 00:09:05,670 Sean Aylmer: must have an investment philosophy that allows these things to 147 00:09:05,670 --> 00:09:06,240 Sean Aylmer: fit into it. 148 00:09:06,780 --> 00:09:09,750 Sandra Lee: Very much so, Sean. They tend to be large scale 149 00:09:09,750 --> 00:09:14,520 Sandra Lee: assets. They tend to have enjoy preferred market positions, as 150 00:09:14,520 --> 00:09:17,639 Sandra Lee: in if you are owning an airport, somebody else can't 151 00:09:17,940 --> 00:09:21,059 Sandra Lee: from down the road come and build another airport right 152 00:09:21,059 --> 00:09:24,809 Sandra Lee: next to you. So we like that sort of defensive characteristics. 153 00:09:24,809 --> 00:09:29,759 Sandra Lee: They're resilient, they're stable, they're providing essential service and facility 154 00:09:29,759 --> 00:09:32,729 Sandra Lee: to the economy and to the social fabric of a 155 00:09:32,730 --> 00:09:36,449 Sandra Lee: particular nation. So for all those characteristics, we see the 156 00:09:36,480 --> 00:09:40,200 Sandra Lee: same sorts of characteristics within forestry and timberland assets as 157 00:09:40,200 --> 00:09:42,900 Sandra Lee: well. But having said that, we have to be very 158 00:09:42,900 --> 00:09:46,799 Sandra Lee: clear, we don't invest in any native logging. They all 159 00:09:46,800 --> 00:09:49,770 Sandra Lee: have to be sustainable plantation forests. 160 00:09:50,099 --> 00:09:53,279 Sean Aylmer: Okay. So this brings us to carbon option or carbon 161 00:09:53,279 --> 00:09:58,380 Sean Aylmer: credit optionality. As a fund, how do you think about 162 00:09:58,530 --> 00:10:01,860 Sean Aylmer: the greening of the economy? Do you think of it 163 00:10:01,950 --> 00:10:04,979 Sean Aylmer: in terms of as an investment and/ or do you think of it 164 00:10:05,400 --> 00:10:08,998 Sean Aylmer: as a responsibility for such a large fund manager? 165 00:10:08,999 --> 00:10:16,320 Sandra Lee: So I think all of the above, Sean. It's obviously really important as the 166 00:10:16,320 --> 00:10:19,110 Sandra Lee: whole world is transitioning into the new economy or the 167 00:10:19,110 --> 00:10:23,730 Sandra Lee: green economy, and super funds play an important role because 168 00:10:23,730 --> 00:10:27,690 Sandra Lee: we're large scale investors, and in many ways UniSuper's very 169 00:10:27,690 --> 00:10:31,230 Sandra Lee: big on its ESG and responsible investing. So for the 170 00:10:31,230 --> 00:10:35,010 Sandra Lee: companies that we have a strong ownership or shares in, 171 00:10:35,010 --> 00:10:38,429 Sandra Lee: we can play an active role in encouraging boards and 172 00:10:38,429 --> 00:10:41,130 Sandra Lee: management teams to transition and do the right thing. 173 00:10:41,730 --> 00:10:43,799 Sean Aylmer: Sandra, thank you very much for talking to Fear and Greed. 174 00:10:44,309 --> 00:10:44,910 Sandra Lee: Thanks, Sean. 175 00:10:45,299 --> 00:10:48,089 Sean Aylmer: That was Sandra Lee, head of private markets at UniSuper. And 176 00:10:49,410 --> 00:10:51,929 Sean Aylmer: of course, always seek professional advice when you are making 177 00:10:51,929 --> 00:10:55,050 Sean Aylmer: any investment decision. This is the Fear and Greed daily 178 00:10:55,050 --> 00:10:57,328 Sean Aylmer: interview. Join us every morning for the full episode of 179 00:10:57,330 --> 00:11:00,660 Sean Aylmer: Fear and Greed, Australia's most popular business podcast. I'm Sean 180 00:11:00,660 --> 00:11:01,859 Sean Aylmer: Aylmer. Enjoy your day.