Industry funds-backed IFM clashes with Rest Super amid bitter Melbourne Airport dispute

The backers of one of Australia’s biggest airports have sensationally turned against each other, seeking to force the exit of the biggest investor.

Melbourne Airport’s super fund owners are locked in a bitter stoush. Picture: Jay Town

Super fund heavyweight Rest has dramatically intervened in the bitter legal stoush between listed property company Dexus and some of Australia’s most powerful investors. Those investors are seeking to force the pair to sell the entire 27 per cent interest they own in the company behind Melbourne and Launceston airports.

Rest, which has held its stake for more than two decades, argued that it should not be caught up in the battle and have to quit its stake, adding that this could put its two million members at a disadvantage.

The push to get Dexus to sell out of the APAC, the company which owns both airports, is being driven by funds manager IFM, which is backed by some of the superannuation sector’s biggest names including AustralianSuper, ART, Cbus and Unisuper. Combined, the two airports are worth about $14bn.

The dispute was sparked when Dexus last year sought to sell off a 9 per cent stake in the airport company, opening up a data room into which it invited 18 of the world’s largest investors.

But its co-owners, which also include sovereign wealth vehicle the Future Fund, argued that this was in breach of its obligations, and it should not have released the confidential information.

Dexus has denied breaching a shareholders deed which controls the operations of the APAC, saying it acted within its rights, and complaints had not been raised in a timely way by other shareholders.

The secretive sales process, dubbed Project Mercury, was dumped by the company in late March. But relations with its co-owners had soured, prompting them to issue a default notice to Dexus saying it had breached confidentiality provisions and demanded they must sell the entire 27 per cent interest it controlled.

The stoush comes just as Melbourne Airport is seeking to build a third runway. Picture Jay Town

This included the stake held by Rest, even though the superannuation fund had not been among the 9 per cent bloc that was looking to sell its interest.

The bitter clash between the APAC owners comes as Melbourne airport is attempting to push ahead with the construction of a $3bn third runway. The project is expected to be finalised by the end of the decade and is designed to handle a doubling of passenger numbers to 83 million.

IFM Investors, the asset management arm owned by some of Australia’s biggest industry super funds, has regularly attracted accusations of using strongarm tactics against other co-investors.

Earlier this year, IFM attempted to force through a second board seat at Naturgy, a Spanish gas network it partly-owns.

Documents filed in the NSW Supreme Court on behalf of Rest’s infrastructure trust and obtained by The Australian outlined the super fund’s rejection of APAC’s attempts to force it to sell out.

A sale would also be a heavy blow to Dexus as it reaps hefty fees from managing the airport company interest and Melbourne airport is the crown jewel of its infrastructure holdings.

APAC has said that Rest is a defaulting shareholder under the deed governing the company that wants it to sell out.

IFM Investors owns a stake of 25.2 per cent, Dexus controls 27.3 per cent The Future Fund has 20.3 per cent, NSW’s TCorp has 18.5 per cent and Utilities Trust of Australia holds 8.7 per cent.

Rest had argued that the default notice was given to Dexus, and it was not validly issued and says that it did not breach the shareholders deed.

The fight could centre on complex legal battles about whether the alleged confidentiality breach was material and irredeemable and whether a forced sale was oppressive, unfairly prejudicial and discriminatory against Rest and the overall interests of APAC.

Rest said it was not actually seeking to sell shares in APAC as part of Project Mercury, and it did not disclose secret or confidential information.

It said that one remedy could have been to leave its stake as is, even if there was a dispute about the shareholders who wanted to exit.