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Morrison & Co reaches A$580m final close on Growth Infrastructure Fund

The fund manager invested in tomato producer Sundrop Farms via the Growth Infrastructure Fund, which has scaled back its fundraising target due to covid-19.

Morrison & Co has reached a third and final close of approximately A$580 million ($414 million; €353 million) on its Growth Infrastructure Fund, falling significantly short of its target of A$1 billion.

The vehicle was used by Morrison & Co to purchase Sundrop Farms, a facility in South Australia that uses on-site solar PV panels and desalination facilities to grow truss tomatoes, from private equity firm KKR.

The firm classifies Sundrop Farms as an infrastructure investment due to its renewable energy infrastructure and a long-term supply contract with supermarket chain Coles.

The Growth Infrastructure Fund was launched in 2018 with a A$150 million commitment from the Clean Energy Finance Corporation, one of the few instances where the CEFC has made an equity investment in an infrastructure fund. The fund has shown interest in agriculture investments in recent months, making an investment in Macquarie Infrastructure and Real Assets’ agriculture platform as well as Tenacious Ventures’ inaugural venture capital fund.

Agri Investor understands that Morrison & Co was forced to scale back its fundraising ambitions due to the coronavirus crisis, with all the capital raised for the third and final close coming during the pandemic. The amount raised in this close was not disclosed.

Morrison & Co declined to comment.

MGIF is a 12-year closed-end fund that will acquire core-plus-type infrastructure assets with high growth potential, such as hospitals, retirement housing, student accommodation, data centers and renewable energy assets, and is targeting returns of 13-15 percent per year.

Morrison & Co chief investment officer Paul Newfield told sister title Infrastructure Investor at the fund’s launch that it intended to introduce science-based emissions targets for the fund’s portfolio, although MGIF is not classified as a sustainability-focused vehicle.

Newfield said: “Infrastructure is a big contributor to carbon emissions, and infrastructure managers have probably been less active in this space than some of the more advanced property managers. We believe decarbonisation of assets will enhance the risk-return profile and appeal to investors. It will also help us generate stronger returns as assets will be more attractive to end customers.”

The fund has made three investments to date: Sundrop Farms; Galileo Green Energy, a European renewable energy developer, owner and operator that was established in February 2020 and is headquartered in Italy; and Flow Systems, a business that designs, builds and operates community-based water infrastructure networks in New South Wales and Queensland, providing a substitute to residents of new communities with drinking and wastewater services on a pricing parity basis with public infrastructure.

MGIF has a commitment to deploy 75 percent of its AUM in Australian assets but can make investments in other OECD countries.

Morrison & Co chief operating officer Nicole Walker said: “We are delighted to have achieved this successful outcome, and to have introduced new investors to the experience and caliber of our high performing team. We had a good mix of capital raised from both new and existing Morrison & Co investors, highlighting our ability to build positive long-term relationships with our partners.”

Morrison & Co reached total funds under management of approximately A$15 billion as of June 2020. It also manages Utilities Trust of Australia, one of the country’s oldest infrastructure funds that was previously managed by Hastings Funds Management, and the Public Infrastructure Partners Fund series that invests in PPP assets.