IFM Investors, Morrison & Co in talks to run Hastings' UTA [updated]

IFM Investors is believed to be one of two managers bidding to take over the management rights for the Utilities Trust of Australia (UTA) from Hastings Funds Management.

The other contender is the New Zealand-based Morrison & Co, an alternative asset manager with some US$6bn under management.

Melbourne-based company IFM, which manages AUD100bn (€63.5bn) of assets and Morrison are said to be negotiating with insolvency specialist, McGrathnicol for UTA.

McGrathnicol was appointed to work with Hastings by its owner, Westpac Banking Corporation, last week after the fund manager lost two significant mandates.

Late last year, Westpac and Northill Capital entered into a definitive agreement in relation to the sale and purchase of the international businesses of Hastings managed out of the UK and US, after an earlier attempt to offload the infrastructure subsidiary failed.

A spokesperson for McGrathNicol confirmed to IPE Real Assets that the firm has been appointed to work with Hastings in an advisory capacity.

He said: “The work is being carried out by McGrathNicol Advisory and includes strategic advice and assistance with respect to business transition.”

“It is not an insolvency assignment,” he added.

Beyond that, however, the firm declined to comment further on its assignment “at this time”.

IFM and Morrison are undertaking due diligence as they negotiate with McGrathNicol, apparently mainly over the price for the management rights.

Established in 1994, UTA is one of Australia’s oldest and largest infrastructure funds.

The open-ended UTA owns a portfolio of 12 assets including airports, ports and other infrastructure assets, valued at AUD5.87bn, at June 30, 2017.

As well, as Australian assets, UTA has stakes in the UK’s South East Water, Port of Portland, toll roads and gas facilities in the US.

The news report said a transaction on the management rights is expected to be concluded next month after the UTA board has gone through the two bids.

UTA investors will have the final say in the appointment of the new manager.

IPE Real Assets understands that IFM has had a watching brief on the development at Hastings for some time, and has indicated its interest in taking over UTA – at the right price.

Also, two of IFM’s shareholders - industry super funds CBUS and HESTA - are also key shareholders of UTA.

Hastings runs two major trusts – UTA and The Infrastructure Fund (TIF) – among its suite of vehicles.

Investors in the smaller TIF last year voted to replace Hastings as the manager and to internalise the management.

Investors of UTA have previously indicated to IPE Real Assets that they, too, were considering the replacement of Hastings as manager of their trust.

Unhappy with the ongoing uncertainty of the future of Hastings, UTA unitholders put the management rights of the trust to tender last November.

Industry sources said that UTA investors specifically excluded Hastings from tendering for the management rights.

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