Acquisitive Charter Hall turns attention to AUD5.6bn infrastructure fund

The Charter Hall Group, which last month pulled out of negotiations to buy Hastings Funds Management, is expected to turn its attention to a AUD5.6bn (€3.74bn) infrastructure fund.

A takeover of Hastings would have given real estate group Charter Hall its entry into infrastructure investment management, but according to industry sources it will now focus on acquiring Utilities of Australia Trust (UTA), an open-ended fund managed by Hastings.

The fund includes: Perth and Melbourne international airports; TransGrid, an Australian energy company in New South Wales; Phoenix Natural Gas in North Ireland; and South East Water in England.

Charter Hall did not comment, but it has been reported that UTA has appointed corporate advisory company Grant Samuel to negotiate.

Unitholders in another Hastings vehicle, The Infrastructure Fund (TIF), last week voted to internalise its management, potentially providing an opportunity for Charter Hall.

A key reason given by unitholders for removing Hastings as manager is the uncertainty over the future of the Hastings’ fund management platform, which has twice failed to be sold.

Another is the departure of key executives from Hastings in recent months, including chief executive Andrew Day, who steps down at the end of September.

But industry sources say it would take up to 12 months to replace Hastings as the manager of the AUD1.88bn fund, and that Charter Hall is more interested in UTA.

UTA was established in 1994 and its investors include superannuation funds and other institutional investors.

If Charter Hall did obtain the management rights to UTA, it is likely it would also pick up the third arm of Hastings’s platform – individual mandates accounting for AUD6.82bn in assets under management.

Despite pulling out of sale negotiations with Hastings’ owner Westpac Bank, Charter Hall’s chief executive David Harrison reaffirmed the group’s interest in moving into infrastructure.

Harrison said last week after his full-year result presentation that the group will move into infrastructure only through acquisition of an existing manager with a sizeable portfolio of Australian assets and a deep investor base. Hastings has some 75 institutional investors.

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