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Macquarie Group Ltd., one of the world’s biggest infrastructure investors, is looking to deploy more of its growing Asia cashpile in markets like Japan and India as its appetite toward China cools.
Greater China carries hard-to-quantify risks stemming from regulatory changes that aren’t always clear, making the likes of Japan, South Korea, India and Southeast Asia more attractive, said Verena Lim, the Australian investment bank’s Asia chief executive officer. While the firm may not be as focused on China due to macroeconomic and geopolitical risks, this can change quickly, she said.
“It’s very dynamic in Asia,” Lim said in an interview from Singapore. “You need to constantly look at your strategies and evolve them.” The firm aims to balance its exposure between developing and developed markets, she added.
Debate over the viability of investing in China has increased in recent years as a slowing economy, trade tensions and regulatory interventions put a strain on asset prices. In contrast, Japan is seeing a revival as inflation returns and corporate governance improves, while India holds appeal as one of the world’s fastest-growing major economies.
Sydney-based Macquarie’s asset management unit closed its third Asia-Pacific infrastructure fund with more than $4.2 billion in investor commitments in May 2022. Bloomberg News reported last year that the bank was preparing to raise a new Asia-Pacific infrastructure fund of at least $4 billion, as well as two dedicated energy funds of as much as $7.5 billion. The bank is starting fundraising for its fourth Asia-Pacific infrastructure fund to raise $5 billion, The Australian reported last month.
Lim and the company declined to comment on any new fund.
The bank’s infrastructure investing arm is freshly cashed up following the sale of its stake in data center business AirTrunk that valued the company at $A24 billion ($15.6 billion), including debt. In all, it has divested 12 assets since January 2022.
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Macquarie is keen to do more deals in Japan like the ¥170 billion ($1.1 billion) one it struck in August with Rakuten Group Inc., said Lim, who is also head of investments for the firm’s Asia Pacific infrastructure fund. The bank agreed to buy Tokyo-based Rakuten’s mobile phone network infrastructure and lease it back to the web conglomerate. Such deals could provide a playbook as more listed Japanese companies look to overhaul their operations, Lim said.
“There are more opportunities in Japan from corporate carve-outs to take-private situations,” she said. “We’re excited about what’s happening.”
Beyond Japan, Macquarie has been actively investing across Asia Pacific with more than $16 billion managed under its infrastructure fund series. In India, where it was the first private road operator and has taken bets from airports to telecom infrastructure, it sees a strong investing environment as assets like roads get added or upgraded.
The firm is also studying investing in new areas within its infrastructure remit, such as tertiary healthcare and education, Lim said. It’s on the lookout for talent to hire with capabilities in these sectors, she added.
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