In this episode of the [i3] podcast, “Conversations with Institutional Investors”, we speak with Mary Manning, Chief Investment Officer of the National Reconstruction Fund Corporation, a recently established $15 billion fund that has been set up to promote the manufacturing industry in Australia. We speak with Mary about the investment objectives and how to balance investing in innovative new technologies, such as the fund's investment in quantum diamonds, that is industrial diamonds, not the fancy ones, with the risk profile of the fund, Mary reveals that they have over 900 applications for funding and are now looking for the best opportunities to invest, but also how to balance the strategic asset allocation and avoid being exposed to too much equity holdings. We also discuss what sets the NRFC apart from other government funding and investment vehicles such as the Clean Energy Financing Corporation and the Future Fund.

Follow the Investment Innovation Institute [i3] on Linkedin
Subscribe to our Newsletter
Explore our library of insights from leading institutional investors at [i3] Insights

Overview of the interview with Mary Manning:

02:00 What is the National Reconstruction Fund Corporation?

08:00 Focusing on the seven sectors of priority: red tram

13:00 One of the risk of having a broad mandate is that you are trying to do everything all at once and not achieve much at all

15:00 We need to be a self-sustaining organisation, so we need to have some sort of dividend income stream

17:30 We have made 10 investments to date; the largest is a $200 million investment commitment in Arafura Rare Earths Limited to help finance the Nolans Project in the Northern Territory

19:30 Investing in quantum diamonds

21:30 The point of the NRF is to manufacture things

23:30 We get a lot of dual-use technologies that overlap between defence and enabling technologies

26:00 We do have certain funding targets for the seven sectors, but you might also notice that they don’t add up to $15 billion

28:30 We do have some restrictions, but they are not necessarily old economy. We have a focus on manufacturing and some of that includes old economy type businesses

34:30 A great problem to have is that we’ve had over 900 proposals (for funding)

36:30 The Act does not allow us to have control positions

40:00 There is some confusion about what the NRF does and what the Clean Energy Finance Corporation does.

44:00 When I started it was a bit like drinking out of a fire hose for quite some time.

Full Transcript of Episode 118:

Wouter Klijn  00:00
In this episode of the [i3] podcast, “Conversations with Institutional Investors”, we speak with Mary Manning, Chief Investment Officer of the National Reconstruction Fund Corporation, a recently established $15 billion fund that has been set up to promote the manufacturing industry in Australia. We speak with Mary about the investment objectives and how to balance investing in innovative new technologies, such as the fund's investment in quantum diamonds, that is industrial diamonds, not the fancy ones, with the risk profile of the fund, Mary reveals that they have over 900 applications for funding and are now looking for the best opportunities to invest, but also how to balance the strategic asset allocation and avoid being exposed to too much equity holdings. We also discuss what sets the NRFC apart from other government funding and investment vehicles such as the Clean Energy Financing Corporation and the Future Fund. Let's get started. Mary, welcome to the show.

Mary Manning 02:18
Thank you so much for having me. It's a pleasure to be here,

Wouter Klijn  02:21
No problem. So can you tell us about what actually the National Reconstruction Fund Corporation is? Because I understand it's created to help diversify and transform Australia's industry and economy, but it also has a return objective. You've been asked to take a commercial mindset to the organisation. Is it as a sovereign wealth fund, a government corporation, a subsidisation vehicle? What is it?

Mary Manning  02:47
Great, great place to start. So the National Reconstruction Fund, or the NRF, as we call it, is a sovereign fund. It was set up by the government about 18 months to two years ago, and the purpose is to device diversify and transform the Australian economy. But maybe we can dig a little into what, what that means and and why the NRF was was set up. So the impetus for the National Reconstruction Fund and similar funds around the world, there are a number, that have have been established, was perhaps in the wake of some geopolitical events, and then certainly in the wake of COVID that governments realise that countries need to have some sovereign capabilities. So globalisation meant that, you know, there was a lot of changes in the world, but it also meant that a lot of countries lost sovereign capabilities in in certain area