Sydney Airport is a bargain buy for $24bn

A Qantas plane taking off at Sydney Airport with two fisherman pictured in the foreground. Picture: NCA NewsWire / Damian Shaw

Another $24bn of an absolutely key investment category will disappear from the public investment marketplace for ordinary investors, if Sydney Airport is successfully taken over and removed from the ASX.

Now that the David Gonski-led Sydney Airport board has folded – to a pretty marginal increase in the offer - only Rod Sims and the ACCC likely stands between the offer succeeding.

Success is even more certain given the fact that UniSuper, which is one of the key members of the group bidding for Sydney Airport, is able to and will vote its 15 per cent stake in favour of the takeover.

As the bid only needs 75 per cent approval from the Sydney Airport securities which are actually voted at the relevant general meeting to succeed, that 15 per cent will almost certainly be decisive.

As we saw with Solomon Lew and Myer last week, a 15 per cent shareholding can often be 30 per cent or more of the votes actually cast at a general meeting.

The ACCC has embarked on an inquiry into whether the takeover is anti-competitive and intends to release its preliminary report just before Christmas.

Here’s a free tip to Sims and Co. Just quietly, it is anti-competitive. Indeed, that is exactly the whole point of the exercise.

Right now, anyone can invest in what is arguably and will continue to be the nation’s absolutely number one infrastructure asset. You can do so simply by buying its securities on the ASX.

A view of a Qantas plane landing at Sydney Domestic Airport from Port Botany in Sydney Australia. Picture: NCA NewsWire / Gaye Gerard

After the takeover, it will disappear from the ASX; the only way you could then invest in it, would be indirectly and in diluted fashion via one of the super funds – one of the industry super funds, such as of course UniSuper - that now owned it.

It’s no happenstance that the deal has been put together and executed by the industry super funds’ investment centrepiece IFM – which used to stand for, what do you know, Industry Funds Management – in their ongoing collective war with corporate-owned and run retail super funds and self-managed super.

It’s similarly no coincidence that IFM’s CEO – and the key driver of this move – is now David Neal, who was the long-time head of the Future Fund, and who so successfully drove its phenomenal growth, built critically on its moves into ‘alternative’ investment categories like, exactly, infrastructure.

Kudos to them for doing so. As indeed to AusSuper for the aggressive takeover moves it made under its former CEO Ian Silk – derided by many commentators (and inept, terrified, paralysed incumbent boards) as ‘inappropriate’.

It is in fact perfectly fine for super funds to make the takeovers; it is up to target boards - and any relevant regulators, like the ACCC - to resist or to recognise the real value, which is not simply of the asset itself but the way it will become the exclusive investment property of the industry funds.

To repeat – as it may not be obvious to Gonski and his board – going forward, to invest in Sydney Airport, you will only be able to do so via investment in an industry fund.

Back in July when Sydney was in lockdown and international flights were banned and not too many local flights were happening, Gonski knocked back $8.25 as totally inadequate.

In August, when Sydney was still in lockdown and the flights were similarly not happening, Gonski and Co knocked back $8.45.

Now when the planes are flying and Sydney’s abuzz, they’ve unanimously endorsed $8.75.

Let me help Gonski out with the maths: but that’s just 6 per cent more on the original offer, less than 4 per cent on the amended one.

The Airport is its own very special form of Sydney waterfront property. Would Gonski accept such a pathetic increase for his own?