Our investment performance to 30 June 2024

Examples

Portfolio activities in the financial year 2023–24 that contributed to performance:

• Digital technology

  Canberra Data Centres (CDC): 

  • CDC sees high demand for data-centre space across its hyperscaler, government and enterprise customers.
  • It is well-suited to capitalising on both the general increase and the Artificial Intelligence (AI)-driven acceleration in demand. It has track record developing centres that can handle demanding computational workloads for customers with exacting quality, security, and sustainability standards (energy and water usage), with the advanced cooling technologies required by AI workloads.
  • It has a strong pipeline of additional sites that are expected to be constructed in coming years.

• High-speed home internet infrastructure:

  • We see high-speed broadband as an essential service for modern households, akin to power and other basic utilities.
  • We invest in the infrastructure required to deliver this service because digitisation trends (e.g. work-from-home, growth in data usage and in data storage) can drive capital growth and cash flows, regardless of the state of the broader economy.
  • As with all our investments, we look for a competitive advantage that can be sustained.  In this case, we believe superior reliability and speed mitigate against obsolescence risk.
  • Our portfolios now own digital infrastructure in Australia, the United States, and Europe. This year, we’ve also added a fibre-to-the-home investment in Germany, where there are strong opportunities for growth, given that current fibre coverage of households is well below the EU27 average.

• Energy transition

  Renewable energy developers:

  • Energy transition is a fast-moving field, and we monitor the opportunity set as it evolves with technology advances and the interdependent responses from policymakers, capital providers, developers and operators.
  • Currently, we find the most compelling returns (for the level of risk) in the development of new renewable energy and storage capacity.  This also means we are financing additional renewable energy capacity that is needed, rather than merely accumulating portfolios of existing renewable assets.   
  • We favour investments in renewable developers with strong internal development and operational teams, as these have a competitive advantage in negotiating grid access, planning approvals and supply chain challenges.
  • Our aggregate pipeline of new assets is well diversified.  It spans solar, wind and battery development opportunities across Western Europe, Central Europe, Latin America, North America, Australia, Japan and India.

  Electric Vehicle “EV” charging:

  • The trend towards less carbon-intensive transport also provides opportunities in the infrastructure needed to electrify transport.

  • We invested in a first-mover European business that builds and owns the infrastructure for charging-at-home solutions.  Users prefer to charge their vehicles at home rather than at their destination or on the street, meaning it should benefit from more stable demand than other charging infrastructure.

  • This business is further aided by operating in a region that has favourable policy support for EVs.

  Part of the funding for these new investments came from sales of investments in some traditional infrastructure assets (including investments in an airport, mature wind farms and gas assets) where we believed that the asset’s rate of growth had stabilised or slowed and better opportunities for your savings were available.

• Healthcare

  Innovative pharmaceuticals:

  • CSC has participated, over a number of years, in funding clinical trials of a medicine to treat a rare and life-threatening disorder in which red blood cells break apart prematurely.
  • Following successful trials and regulatory approvals across three continents, this investment generated strong returns to our customers, while improving the quality of life for patients.

  Healthcare technology:

  • CSC financed the development of a novel defibrillator to help patients at risk of cardiac arrest from ventricular arrhythmias (irregular heartbeats). Its innovative design improves on traditional defibrillators by reducing risks of infection and other complications, as it is less invasively placed under the skin.
  • After receiving regulatory approvals, our return is expected to be generated from a combination of guaranteed payments and royalties based on product sales, uncorrelated to the economic cycle.

• Education

  Increased access to education:

  • CSC provided equity capital to the world’s largest provider of K-12 private education.
  • This company provided diverse curricula and educational choices across multiple price points with schools across the Middle East and Europe. Today, the company educates ~138,000 students.
  • It delivered strong investment returns over our holding period, while improving access to quality education globally.

• Waste reduction

  Carbon capture from waste biomass:

  • CSC has made a very early-stage investment in an enterprise that converts waste biomass into biochar via a patented process involving high pressure and high temperature, and ultra-fast processing that enables industrial scale.
  • Biochar is commonly used to improve soils, however the superior durability of the biochar produced by this process shows promise for improving the structural performance of concrete and enabling reductions in the amount of cement used.

• Global best practice and continuous improvement

  Building new investment management businesses: We identified and partnered with global best practice investment talent to create new sources of investment returns for our customers in a tailored and cost-effective way. By seeding these new businesses early, we’re able to share profits in the partnership, effectively lowering fees over time as the businesses grow by winning additional new global clients that increase their assets under management.

  Best value for money: Our focus on continuous improvement means that structures we have been putting in place over the past seven years continue flowing through to sustainably reduce the investment costs of our Balanced, Aggressive, and Income-focused investment options.