PAUL MCBETH: Morrison’s next evolution

Paul McBeth is the editor of The Bottom Line and Curious News, and previously worked at BusinessDesk for 15 years.

Morrison has a reputation for employing New Zealand’s smartest people in the room.

When someone on the other side of the negotiating table gets one over them, there’s typically quite a few corks getting popped.

So it was quite the thing for those of us outside the inner sanctum to see the infrastructure asset manager bring on an eternal investor in the form of Japan’s Sumitomo Mitsui Trust Bank.

The deal has been well-traversed in recent days. An as-yet undisclosed sum will be injected into Morrison to fuel its growth ambitions, while Sumitomo will commit US$500 million to Morrison-managed infrastructure funds.

And the pair will work together to raise at least US$1.5 billion – including from third parties – for each other’s infrastructure investments in their respective home markets.

Even without the equity injection, that’s a princely mandate for the Morrison team to have won given it opens access to the very deep pools of Japanese pension funds, which are getting urged to direct more money domestically as one of the missing links in fuelling a revival of Japan’s capital markets.

Whenever I am by your side

Meanwhile, Sumitomo has circled asset management as a key area to drive its growth over the next five years, with a deeper push into private assets seen as a way to mitigate shrinking fee rates that have accompanied the growth in assets under management from its existing Amova Asset Management arm.

And by 2035, Sumitomo expects Morrison to contribute about ¥10 billion – roughly NZ$107 million – to the Japanese giant’s bottom line. That’s a lot, but in the scheme of Sumitomo Mitsui Trust Group that would be a 3.1% lift to its ¥317.57 billion (NZ$3.41 billion) profit attributable to shareholders.

New Zealand, after all, is still a little player in a global sense.

But if Morrison’s not already there, it can’t be too far away from hitting those kinds of numbers.

While the privately-held Morrison’s local numbers remain a closely guarded secret, the Australian arm – which employs 78 of the company’s 220-odd staff – racked up a profit of A$46.1 million in the March year on revenue of A$147.1 million. That was down from a profit of A$63.7 million on revenue of A$184.3 million in the March 2025 year, a period that delivered the Morrison group a hefty NZ$346.9 million incentive fee from Infratil’s CDC data centres business.

And there’s more juice on the way, with Forsyth Barr analysts picking the latest uplift in CDC’s valuation will generate a NZ$410 million performance fee for Morrison in the current financial year.

Wise enough to carry the scars

When the late Lloyd Morrison stood up the asset manager almost 40 years ago, who would’ve thought we’d be talking about data centres as long-lived infrastructure plays that deliver solid and sizeable returns?

Go back to when it first listed Infratil in 1994 – by the end of the financial year the $46 million portfolio consisted of stakes in TrustPower, CentralPower, Powerco, Port of Tauranga and Ports of Auckland, and attracted a management fee of $466,000.

Through the years, we’ve seen investments in buses, airports, ticketing systems, telcos, radiology, and retirement villages to name a few.

Not every one of them has been a winner, but with Infratil’s portfolio now standing at $20.6 billion and Morrison charging a $122.6 million base fee, it’s hard to argue against the invention and reinvention of the group.

You’re drawn to the flame

And that’s just Infratil. Morrison manages US$31 billion of assets including the NZX-listed vehicle and the A$9 billion Utilities Trust of Australia fund.

Sure, the dollar figures involved might seem staggering, but does anyone bat an eyelid at the $206.7 million of management fees ANZ collected in the September 2025 year from the $30.7 billion or so it managed that was largely from KiwiSaver funds?

The alternative is that Morrison sticks to managing institutional money, leaving regular people out in the cold. Hardly an ideal situation for a nation trying to encourage wider participation in capital markets.

As NZ Shareholders’ Association chief Oliver Mander puts it, the scale of those Infratil fees simply reflects the success Morrison has had and is another example of the fact that New Zealand is rather good at building mini multinationals, such as Fisher & Paykel Healthcare.

Tell me all the things you would change

But the real irony is that Wellington has developed an infrastructure asset manager who foots it with the world’s best – and most cutthroat – investment houses.

Morrison chose to go for a deal that will transform it into an organisation that will span generations as opposed to delivering what would’ve likely been a heck of a payday for the existing owners.

In doing so, it’s kept its roots decidedly Kiwi, even as its thin tendrils wrap around the world, and kept a wealth of institutional nous on our local shores.

So how has New Zealand got its own infrastructure so terribly wrong, the latest example being the scaled back timeframe for the roads of national significance.

It’s easy to go back a decade and muse on yet another missed opportunity when Infratil was exceedingly interested in designing, building and managing social housing. There was – and still is – a real need, which on the basis of their historical execution, would’ve been delivered along with an appropriate return to Infratil’s investors.

Instead, the government of the day balked at the price, the next lot gave Kāinga Ora a blank cheque to go and build new houses only to be surprised by a ballooning debt, and the current administration’s target of slashing the number of people in emergency housing isn’t overly concerned about where the displaced people end up.

It’s easy to forget what you learned

Similarly, the Morrison-backed bid to build Transmission Gully put a far more realistic price on the construction of the road, and what would’ve been a cheaper 20-year maintenance contract, but was rejected by the brains trust at the New Zealand Transport Agency, which was too scared of approving a gold-plated project so set their price expectations unrealistically low.

Don’t be surprised if a common theme starts creeping through, because New Zealand is something of a cheapskate when it comes to building things. Heck, even the Inland Revenue Department’s $1 billion IT upgrade to get the tax system’s infrastructure off life support raised hackles over the price.

Which brings us back to Morrison and its new Japanese partner.

If there’s a thirst from Sumitomo for infrastructure assets and a desperate need to deliver them in New Zealand, it seems like an absolute no-brainer for Morrison to be involved.

And if those fees seem a little too big to swallow, by all means, let’s sit on things for another couple of decades to see if they get a little cheaper.

Watch Paul McBeth and Oliver Mander discuss the Morrison deal:

Image from Curious News.