-- Future Fund offers A$2 billion for all of Australia
Infrastructure's assets
-- Represents a 10% premium to the value of the assets
(Adds detail on the proposed deal from AIX and Future Fund
throughout, and comments from AIX's chairman.)
By Robb M. Stewart
MELBOURNE--Australia's sovereign wealth fund has made a 2
billion Australian dollar (US$2.1 billion) bid for all of the
assets of listed investment firm Australian Infrastructure Fund
Ltd. (AIX.AU), which includes minority interests in airports around
the country and in Europe.
The A$77 billion Future Fund has offered A$3.22 per security, a
22% premium to the previous day's closing price for AIX and a 10%
premium to AIX's most recent valuation of its assets, the two funds
said in separate statements Friday.
David Neal, chief investment officer of Future Fund, said the
assets are strongly correlated to Australia's economic growth and
offer inflation protection and high levels of earnings certainty.
"These characteristics provide a strong fit with the fund's mandate
to achieve high, risk-adjusted returns over the long term," he
said.
The offer is conditional and nonbinding, and AIX said a deal
will only go ahead after sales agreements are reached for each of
the assets. Other shareholders in each of the airports in
Australia, Germany and Greece have pre-emptive rights to buy AIX's
stakes, but AIX Chairman Paul Espie in an interview said Future
Fund was seeking to buy all or some of the assets should another
bidder emerge.
If successful, a takeover of the assets would replace plans
agreed last month for AIX to take control of fund management from
Westpac Banking Corp.-owned (WBK) Hastings Funds Management. Mr.
Espie said AIX wouldn't become a "cashbox," and would instead
distribute the proceeds from a sale of the assets to investors,
effectively closing down the fund.
AIX had been selling off non-core assets including stakes in
Australia's Port of Portland and Port of Geelong over the last year
to focus on airports and to try and narrow the discount the
investment firm trades at to the value of its assets, Mr. Espie
said. That was why it intended to internalize management of its
fund.
In Australia, the assets include a 30% stake in Perth airport,
12% in Melbourne's airport operator, 49% in Queensland Airports and
28% in Northern Territory Airports. AIX also owns a 40% interest in
Hochtief AirPort Capital Group, which has stakes in airports in
Athens, Dusseldorf and Hamburg, as well as Sydney, Australia.
AIX's net profit fell 8% to A$196 million in the year through
June from A$212.3 million, although the value of its interests
increased 3.4% to A$1.82 billion, ahead of the investment firm's
A$1.65 billion market capitalization as of Thursday, AIX said
separately Thursday.
Any deal with Future Fund will be subject to approval from AIX's
board, its securityholders, and Hastings Funds Management. Credit
Suisse is acting as financial adviser to AIX, and Freehills as
legal adviser.
Future Fund, set up in 2006 to invest government funds to cover
future pension liabilities, infrastructure investments are now
valued at more than A$4.3 billion and it continues to seek
opportunities to increase that exposure to tangible assets. It
already directly holds almost 17% of Australia Pacific Airports
Corp, which operates Melbourne and Launceston airports.
Write to Robb M. Stewart at robb.stewart@wsj.com
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