QIC appoints new real estate head

QIC says that former Dexus executive Deborah Coakley will replace Michael O’Brien as head of its real estate funds business and multi-billion development pipeline.

Two women walk past a fence with Thames Water signage.

Some big changes at QIC’s real estate business. The investment powerhouse this week announced that former Dexus chief executive for funds management Deborah Coakley will replace Michael O’Brien as head of QIC’s real estate funds business and multi-billion development pipeline. Prior to her appointment to QIC, Coakley was responsible for managing Dexus’s $30bn real estate funds management business, which comprises wholesale pooled funds, capital partnerships, retail funds, and listed REITs.

QIC chief executive Kylie Rampa says Coakley’s appointment would build on the work of O’Brien and his team and position the “real estate platform for continued evolution and growth in alignment with investor objectives.”

She thanked O’Brien for steering “the portfolio through the destabilising impacts of Covid-19 and the complex market environment in the years following the pandemic.”

The appointment comes amid some strategic changes in QIC’s investment focus. Earlier this year, QIC announced it was pivoting its new infrastructure investment fund to Australasia away from US assets such as car parks..

The new strategy for QIC included acquiring a big stake in a smart metering business called Bluecurrent, which operates in both Australia and New Zealand.

Rampa this week fronted the Queensland Parliament estimates committee where she confirmed QIC has written down it investment in struggling UK utility Thames Water to zero and was looking to offload its stake in New Zealand’s Powerco.

Rampa told the committee that Thames Water “has been quite a troubled investment and asset.” Moody’s this downgraded Thames Water to “junk” status with its parent company already in default on some loans.

QIC has about 5 per cent of Thames Water, but Rampa this week declined to say how much money has been lost by the Queensland fund, citing confidentiality.

“The asset has come under difficulty with the regulator, Ofwat,” Rampa told the committee.

“When the investment was made, it assumed a very stable regulatory regime. We currently find that asset not in that position.

QIC chief executive Kylie Rampa.

“We have written that asset down to zero, which is very unfortunate. We have looked very hard and at the lessons learned from that, from a regulatory perspective.”

Rampa told the committee that QIC runs a diversified investment portfolio and the funds that own Thames Water will still deliver record returns this year.

In relation to the possible sale of QIC’s 33 per cent stake in Powerco, one of New Zealand’s biggest electricity and gas distribution networks, Rampa noted the “asset has met its investment objective and the investors have requested liquidity.”

“It is appropriate for us to test the market, which is what we have done, to put that to provide liquidity back to the investors,” Rampa said.

Rampa told the committee that QIC from a corporate perspective, had “minimal levels of debt.” “Our debt is really working capital,” she said.

“We do have debt structures within our investment vehicles and they are all different, subject to the investment objective and the gearing tolerance of each one of those funds. Some could be as low as 10 per cent and others might be closer to 30 per cent, but it is all run through very rigid Treasury management processes and, generally speaking, would be an agreement with the investors in those particular products and funds about what their debt tolerance is.”

Deborah Coakley