Some of Australia’s largest superannuation funds are heading to the nation’s Supreme Court in a bitter legal battle over a significant stake in Australian Pacific Airports Corporation (APAC), the operator of Melbourne and Launceston airports.
The case could reshape the ownership structure of Melbourne Airport — the country’s second largest — and further consolidate control of key transport assets in the hands of a few powerful funds.
The plaintiffs — IFM Investors, the Future Fund, SAS Trustees (represented by TCorp), and a Morrison & Co-managed fund — are seeking to compel fellow shareholders to sell their stakes following what they allege is a technical breach of the shareholders’ agreement.
Their target is Dexus, which represents the “Dexus bloc” — a 27% collective holding in APAC that includes investors such as Australian Retirement Trust (ART) and Rest Super. Dexus, which directly owns 9.7%, is accused of breaching confidentiality terms by using a “market confidentiality deed” when it tried to sell its 9.7% stake last year. The plaintiffs argue this violated disclosure provisions in the agreement and gives them the right to force a sale.
The bloc is estimated to be worth between A$4bn and A$4.5bn. If the court rules in their favour, the plaintiffs will most certainly exercise pre-emptive rights to acquire the stake and increase their holdings in the airport.
The high-stakes dispute underscores the strategic value of airports to Australia’s super funds. With the exception of Canberra Airport, all capital-city airports are now in the hands of major superannuation investors. The most valuable is Sydney Airport, sold at an enterprise value of A$32bn in 2022 to a consortium including UniSuper, ART and AustralianSuper.
That concentration is deepening. In October, UniSuper exercised pre-emptive rights to lift its stake in Adelaide Airport from 49% to more than 60%, while IFM Investors increased its holding from 12.8% to 20% after Igneo Infrastructure Partners sold its 15.3% stake. Those rights reportedly squeezed out rival bidders including OMERS, Stonepeak and Rest Super.
Adelaide Airport is the fifth airport to change hands in the past year.
After losing its bid for Queensland Airports Ltd, which owns four airports including Gold Coast, AustralianSuper spent more than A$500m to acquire a further 15% stake in Perth Airport from the Utilities Trust of Australia, taking its total to 20%.
The only major non-super owners of Australian airports are JP Morgan Asset Management, which controls North Queensland Airports, and KKR, which owns Queensland Airports.
With recent ownership shifts driven by corporate strategy changes and fund wind-ups, control of Australian airports is increasingly concentrated in the hands of half a dozen large funds.
How regulators respond to this trend is an open question.
The Airports Act 1996 includes provisions limiting cross-ownership of Australian airports to 15% and capping foreign ownership at 49%.
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