Media Release

11 May 2018

 

Auckland, 11 May 2018: The NZ Super Fund has added another expansion capital investment to its NZ$38b (US$27b) portfolio, investing US$65m in cloud-based waste and recycling technology company Rubicon Global (www.rubiconglobal.com/).

Headquartered in Atlanta, Rubicon Global ('Rubicon') provides an innovative technology platform for waste and recycling. It connects customers to a network of independent waste haulers and is leading the development of smart city products in the waste and recycling space. The company's goal is to help businesses, governments and organisations confidently execute on their sustainability goals through their waste management operations.

Mark Fennell, the NZ Super Fund's Acting Chief Investment Officer, said Rubicon provided an attractive opportunity for the Fund to increase its exposure to expansion capital.

Following the Rubicon investment, around 2% of the NZ Super Fund is invested in expansion capital investments. The Fund has direct investments in fuel cell manufacturer Bloom Energy, dynamic glass manufacturer View Inc. and waste-to-energy company LanzaTech. In New Zealand the NZ Super Fund has supported a large number of small and medium-sized high growth companies via external managers Direct Capital, Pioneer Capital, Pencarrow, Waterman Capital and Movac. 

Mr. Fennell said: "It's pleasing to be able to leverage our timeframe, scale and diversification to support growth companies such as Rubicon that, while established from a technology point of view, are pre-IPO. As a long-term investor, the NZ Super Fund is able to invest in high growth companies with a view to realising long-term potential. These expansion capital investments are an important part of our investment mix because they can help drive long-run returns."

"This particular investment also aligns with the Fund's strategy to identify investments that have the potential to benefit from the global transition to a low-carbon economy. Rubicon, which aims to divert waste from landfills and reduce greenhouse gas emissions, has strong sustainability credentials and complements our climate change investment risk strategy."

Rubicon's SVP Strategic Initiatives, Michael Allegretti said: "As a company with a deep commitment to sustainability, Rubicon is proud to be backed by the NZ Super Fund, one of the world's best performing sovereign wealth funds and a global leader in responsible investment. We share their belief that environmental, social and governance factors are material to long-term financial returns and look forward to adding value to the Fund."

ENDS

 

About Rubicon Global

Rubicon Global is the worldwide leader in sustainable, cloud-based waste and recycling solutions. Using its proprietary technology platform, the company provides comprehensive waste stream solutions that enable companies and governments to reduce expenses, increase recycling, and find economic value in their waste. Rubicon's goal is to create sustainable solutions for businesses, governments and the planet. For more information please visit www.rubiconglobal.com.

NZ Super Fund statement on Auckland Light Rail Project

 

The NZ Super Fund confirmed today that it had submitted an unsolicited proposal to the Government offering to assess the viability of the Auckland Light Rail Project for commercial investment.

Acting Chief Executive Matt Whineray said: "The Government has signalled its intention to accelerate core infrastructure investment in a number of areas. We consider the Auckland Light Rail network to be an infrastructure project of sufficient scale and significance to be an attractive prospect for investment. We wish to explore whether a NZ Super Fund-led consortium leveraging our international relationships can fund and deliver the project, on a fully commercial basis."

The NZ Super Fund has identified as its potential partner CDPQ Infra, a wholly owned subsidiary of Caisse de dépôt et placement du Québec (CDPQ) responsible for developing and operating infrastructure projects. CDPQ is one of Canada's leading institutional fund managers with USD238.2 billion in net assets, and has extensive experience in infrastructure development and investment globally. CDPQ Infra is responsible for developing, building and operating Montreal's 67-km light rail network. Other members could potentially be added to the consortium.

The NZ Super Fund understands and respects the Government's need to run a procurement process and looks forward to further engagement with the NZ Transport Agency.

Currently around 2% of the NZ$38b NZ Super Fund is invested in infrastructure globally. It has around $5b invested in New Zealand.

Given the commercial sensitivity of the process further comment by the NZ Super Fund will be limited at this time.

In this 'Investment Environment Report' Mike Frith, Manager, Economics, explains the global investment environment and its implications for the NZ Super Fund.

Watch a short video of Mike Frith discussing the investment environment

Economic and market backdrop

Global growth is broad-based and appears robust across US, European, Japanese and emerging market economies. Forecasters expect this momentum to be sustained – the behaviour of central banks and US fiscal policy changes will have the biggest impacts through 2018.

Investment markets have been characterised by a surplus of funds chasing financial asset returns. This glut in global liquidity has reduced interest rates, suppressed market volatility and pushed up the prices of financial assets. As a result, investors have observed actual returns well above our expectations across most asset classes.

How has the Fund performed?

Consistent with movements in asset markets, the Fund has returned more than 20% over the past 12 months. Our reference portfolio, which comprises around two thirds of the total Fund and provides our benchmark, returned 19% while the activities of the investment professionals within the Fund delivered an additional 3% - more than a billion dollars.

Fund activity

While the Fund remains strongly weighted towards growth assets, our overall use of active risk remains comparatively low, reflecting our view that many assets are fairly valued. However, the Fund remains busy – over the past six months it has made new investments in an Australian farming business and a conditional offer to invest in Fidelity Life, and made changes to our global equity portfolio to reduce our exposure to carbon emissions.

Important Notice

This report has been prepared as a high level summary of certain matters of interest. It is necessarily generalised and may not be relied upon. It does not constitute financial, taxation, legal or professional advice. Any forward-looking statements in this report are subject to risks and uncertainties, and actual events may differ. No representation or warranty is given as to the accuracy or completeness of this report. To the maximum extent permitted by law, Guardians of New Zealand Superannuation as Manager and Administrator of the New Zealand Superannuation Fund (and its affiliates, officers, employees and agents) exclude any liability and responsibility in connection with this report.

This week I’ve been visiting the Critical Care Unit at the hospital again. Today, one person was dying. He had pulmonary fibrosis and was at the top of the waiting list for a lung transplant. He picked up a lung infection before he got the transplant. About 10 people were standing around his bed, waiting for him to die, including the doctor, and a dog came in to see him. I wanted to cry, and I didn't even know him- but I've talked with his daughter and his wife.

 So it’s with relief that I am moving on to a more frivolous subject- even though I would not normally deem it to be frivolous- and that is the New Zealand Super Fund and the fact that the government is now resuming contributions. In fact, NZD 500 million will be paid tomorrow.

 Here is the press release.

 The Board of the Guardians of New Zealand Superannuation, the manager of the NZ Super Fund, has welcomed the resumption of Government contributions to the $37 billion Fund.

The Government plans to put $7.7 billion into the NZ Super Fund between now and June 2022, with the first payment to be made on Friday, 15 December.

The cost of providing universal superannuation in New Zealand is rising due to an increasing proportion of older people in the population. The NZ Super Fund, which invests globally, is a way for the Government to save now in order to help pay superannuation costs in the future. It will smooth the cost of superannuation between today's taxpayers and future generations.

At the projected peak of withdrawals from the NZ Super Fund in 2078, the Fund will be covering 12.8% of the country's net superannuation bill. The projected tax paid by the Fund will equate to a further 8.5% of the superannuation cost.

Chair Catherine Savage said: "We welcome the resumption of contributions to the NZ Super Fund and note the apparent progression towards funding in accordance with the formula in the NZ Superannuation and Retirement Income Act."

"The Fund's performance has been exceptional. It has returned 10.5% since inception in 2003 and 21.3% over the last 12 months.* While we remain confident that the Fund will deliver value for taxpayers over the long term, more normal returns (7%-8% p.a.) are expected in future."

"It is important to understand that, for long-term investors such as the NZ Super Fund, market downturns are often when the best investment opportunities can be secured. We are well positioned to take advantage of any market stress."

Ms Savage said the contributions would initially be invested in passive, low cost equity and bond investments, with new active investments to be added as opportunities arise over time.

"We retain our strong emphasis on growth investments and as a result the Fund continues to be heavily weighted towards shares."

Contributions to the Fund were suspended in July 2009.