Offshore pension funds outpace super in backing energy build-out

Octopus Australia has raised $1.7 billion for Australian renewable energy since July 2025, but 75 per cent of that capital has come from international pension funds, according to chief executive Sam Reynolds. Speaking at the Investment Magazine Fiduciary Investors Symposium in Healesville, Reynolds said he partly agreed with the prime minister that Australian investors could do more, adding that the opportunity is "seen a little clearer internationally than it is from our local supers." Local pension funds still provide support, he said.

Dutch pension investor APG committed more than $1 billion to Octopus Australia's flagship renewable energy fund, OASIS, in July 2025, joining existing investors including super funds Rest and Hostplus. Reynolds described the energy investment opportunity as "much bigger than our own superannuation market in this country," and said the market is currently a buyer's market, with plenty of assets for sale and a shortage of equity.

Reynolds, who founded Octopus Australia in 2018 after leading the Octopus energy investment team in London, said the firm had to change its approach to attract Australian institutional capital. He said the firm initially focused on climate and ESG themes, raised a small first fund in 2019 and 2020, and returned the money in 2021 because the strategy was wrong; the fund was placed in ESG categories and returns were around 8 per cent. Octopus reworked its strategy in 2022 around returns, removing much of the climate and ESG language from presentations. Reynolds argued that energy assets must compete with oil and gas pipelines, ports, airports, commercial real estate and global infrastructure, and that long-term institutional capital requires risk-adjusted returns of double-digit levels.

Reynolds also said about 60 per cent of Australia's energy still comes from coal-fired stations built in the late 1970s and early 1980s, which are reaching the end of a useful life of roughly 45 to 50 years. He said no new coal plant is under construction or in development, Australia has no nuclear power or interconnectors with other countries, and the wait for a gas turbine is about seven years. He said Origin and AGL are investing in batteries but that batteries "don't generate energy," and that a supply-demand imbalance is "not there today, but it is coming in the next three years." Octopus accounted for 40 per cent of new energy assets last year, he said. Reynolds added that new coal plants would take about 15 years to deliver power and would struggle to attract funding, and that data centre demand is intensifying pressure on supply.