IFM Investors should be expected to make full takeover bids for listed companies as the amount of money held by their super fund LP’s inexorably rises.
“[Will we] take [companies] private. Yes, that’s a distinct possibility,” the chief executive of the industry super owned fund manager, Brett Himbury, told reporters prior to releasing its annual results on Monday (16 July).
“Just the outright pool of capital is larger [now]. The pool of capital that we in aggregate manage enables us to take greater exposure to individual securities to diversify.”
He noted total funds under management in the Australian superannuation sector is at about AUD 2.6trn (USD 1.93trn) now, and is forecast to grow to close to AUD 6trn in a decade.
The level of experience IFM now has in unlisted companies has given it a greater capacity “not just to buy assets, but to buy and manage [companies],” he added.
He said it would most likely make any takeover bids in conjunction with strategic partners which can bring operational expertise to investee companies.
IFM is understood to have engaged UBS to look at all options on a possible tilt at APA Group or its assets, depending on various regulatory decisions on CK Infrastructure’s present AUD 11 a share bid.
Local media have also reported IFM tried to make a bid with its super fund clients for listed hospital operator Healthscope before a bid by Australian private equity group BGH Capital with AustralianSuperwas launched in April and a counter offer was lobbed by Brookfield in May.
Cautious Asia growth
In terms of markets it would look to invest in, Himbury said it would continue to focus on OECD countries but continue the ramp up of its interest in assets in Asian countries, where it has mainly raised funds to date.
“We have been very focused in Australia and increasingly in North America and Europe, but we are unashamedly focused on looking at opportunities in a really considered way in Asia,” Himbury said.
It established an office in Seoul and beefed up its staff in Hong Kong last year. Himbury indicated Korea and Japan – where it has also raised funds – are the most likely markets for investments and most likely in collaboration with Asian or Australian investors.
“We are exploring opportunities to collaborate with Australian investors in the region. There are opportunities, but there are some significant risks. We have a small team of experienced people on the ground looking at [Asia] more deeply, but we’re not looking to do anything in the near term.”
It is understood IFM’s 40% investment in Mersin International Port in Turkey in October last year – alongside 50% owner, the Port of Singapore Authority – has helped give it a strategic partner to invest alongside in Asia.
FUM continue to grow
IFM Investors’ funds under management hit AUD 107bn in the year to 30 June from 312 institutional investors in 19 countries. That is a 15% YoY increase – or AUD 12.9bn rise – from AUD 94.1bn a year earlier.
The growth is slower than the 33% YoY jump in FUM of the previous year. Himbury said this was due “greater variability of cash flow – we have had modest cash outflow as clients are making active decisions”.
Out of the total, he said about AUD 48bn is infrastructure equity, 34bn of that outside Australia. Listed equities accounts for about AUD 27bn, with AUD 3bn of that in non-Australian listed companies.
Debt investments accounted for about AUD 30bn, with AUD 10bn offshore. Investments in private equity totaled AUD 2bn, with an even split between Australian and offshore.
Last year the corresponding figures were: Around AUD 39bn unlisted infrastructure investments, AUD 31.2bn in debt investments, AUD 20.9bn in listed equities and AUD 1.8bn in private equity investments.