Rich-listers in $100m super fund deal to help airport take off

Rich-listers Lindsay Fox and Max Beck have clinched a $100m funding deal with three super funds for Essendon Airport.

Property developer Max Beck co-owns Essendon Airport with Lindsay Fox. Picture: Sarah Matray

Billionaire Lindsay Fox and fellow rich-lister Max Beck have clinched a deal for their Essendon Airport to raise $100 million in long-term debt from three Australian superannuation funds.

AustralianSuper, the country’s biggest industry super fund, Cbus and fund manager IFM Investors have agreed to lend the money to Mr Fox and Mr Beck’s privately held Essendon Fields over 10 years in a deal understood to be led by Westpac’s institutional bank.

The groundbreaking deal follows that of billionaire Anthony Pratt, who last year arranged with AustralianSuper and IFM to lend $150m to his cardboard box maker and paper recycling firm Visy over 10 years in a deal also led by Westpac.

He has expressed interest in making further agreements with super funds in Australia, and is using the $150m to refinance existing senior debt.

As owners of private companies, the billionaires and rich-listers do not have access to equity markets, making them more reliant on traditional bank financing.

Mr Pratt has promoted the super funds as an alternative source of money. His 2017 deal was one of the first by a large, privately owned Australian company with super funds, and was similar to deals worth more than $500m he has struck in the US in the past two decades to drive the rapid growth of Visy’s sister company Pratt Industries.

A source told The Australian that the Essendon Fields deal mirrored the one arranged by Mr Pratt last year.

Essendon Fields is jointly owned by long-time friends Mr Fox, a transport magnate, and Mr Beck, a property developer.

The duo’s rapid construction at Essendon has left the precinct with a book value of about $1 billion.

The long-term debt will help continue property development at the airport precinct, where management want to build more office towers to complement the large car yard zone and Hyatt Place hotel and conference centre that was opened last year.

It also comes at a time when bank lending practices have come under close scrutiny at the banking royal commission.

Mr Fox, who made the bulk of his estimated $3.56bn fortune from the Linfox logistics and trucking giant, has expressed some frustration with the banks, while Mr Pratt has previously enlisted the help of former Prime Minister Paul Keating to promote his cause.

Mr Pratt has championed the idea of convincing super funds about the merits of lending to Australia’s large and medium-sized businesses, which could allow corporations to bypass the traditional bank lenders or equity markets to fund their expansion plans.

His Pratt Industries has funded the building of several paper mills in the US, typically with money raised in long-term 25-year debt from pension and super funds.

Last year, Pratt Industries had a super fund bond raising of $200m of 30-year debt, which was a mixture of tax-exempt and taxable bonds.

Mr Pratt has previously revealed that all of the debt he has raised in the US has been long-term and at fixed rates, whereas in Australia that figure is closer to 40 per cent.

Another rich-lister, Christian Beck — no relation to Max Beck — last year reportedly raised $350m for his search and software business InfoTrack.

The money was raised from a variety of institutions throughout Asia, including Singapore and Hong Kong, along with Australian and Canadian pension funds, and was arranged by Goldman Sachs and JPMorgan.

Essendon Airport is the biggest corporate jet base in Australia and still runs an operating airport.

It has the largest car dealership precinct in Australia with 15 car sellers.

Its owners are keen to build more office towers.

They plan to roll out one every 18 months.

Mr Fox and Mr Beck paid $22 million to the federal government for a 99-year lease 17 years ago on land that is about 11km from the Melbourne CBD.