Charter Hall is believed to be lobbying AMP Capital’s major superannuation fund clients to switch their allegiances to Charter Hall and invest more of their money with the property group and less with the troubled financial powerhouse.
It is understood that Charter Hall’s plan is not to go head-to-head with Dexus Property Group in a battle to gain control of the AMP Capital Diversified Property Fund, but instead target the investors across the entire AMP Capital real estate platform directly so that funds previously allocated to AMP would in future be invested with Charter Hall’s real estate vehicles.
Talk in the market has existed for at least a year that Charter Hall is keen to gain control of AMP’s real estate funds, but many believe winning over its investors for an increase in future investment dollars for its own business is a smarter approach.
The group recently hired former AMP Real Estate boss Carmel Hourigan to run its office property division and her connections will prove beneficial when it comes to winning the favour of the investors with her former employer.
Two of the major investors in AMP Capital are UniSuper and Sunsuper and the expectation is that they will be on Charter Hall’s visiting list in the coming days if they have not been already.
However, they are not investors in ACDPF, but other real estate funds within AMP.
In the past week, Dexus has written to the ACDPF responsible entity and put to it an unsolicited proposal to merge the fund with the $3.3bn Dexus Wholesale Property Fund.
Dexus is working with adviser Greenhill, while AMP Real Estate Funds Management is working with Evans and Partners Corporate Advisory and Herbert Smith Freehills.
The proposal is understood to have been encouraged and welcomed by many of the existing investors within the AMP Diversified Property Fund.
The net assets are worth $4.5bn and an independent committee has been formed at AMP to assess the proposal.
It is understood that AMP has not received any other formal approaches and investors will have some level of say over the outcome.
Dexus is now awaiting a response from the responsible entity to find out whether it will be allowed to conduct due diligence.
Most believe that Dexus has a strong chance of gaining control, given that many of the fund’s investors are the same as those in ACDPF.
The big question is whether a party such as Blackstone comes over the top of Dexus and bids for AMP’s entire asset management platform AMP Capital, which has $192bn under management and some estimate to be worth between $2bn and $3bn.
However, the challenge for any buyer of AMP Capital is gaining the backing from its investors, as seen when Westpac sold Hastings Funds Management and investors dumped Hastings as the manager and instead put their funds with Morrison & Co and Macquarie Investment and Real Assets.
Expectations are that global groups will line up for AMP Capital, which is ranked as the No 8 top performer among the world’s largest infrastructure managers, according to IPE Real Assets.
This could include other top performers such as KKR, Brookfield, GIP, IFM, BlackRock, APG, EQT or Lazard.
The situation is somewhat a repeat of history for AMP which in 2003 faced raids on its listed funds by real estate rivals, resulting in Westfield wrestling away control of shopping centres and Stockland its office assets, while AMP-run industrial assets went to Charter Hall.
The ACDPF includes investments in buildings such as Sydney’s Quay Quarter office and retail complex at Circular Quay and the shopping malls Macquarie Centre in Sydney’s north and Pacific Fair on the Gold Coast.
Investors have grown impatient with AMP following years of underperformance and with a controversial decision to appoint Boe Pahari as head of AMP Capital despite a $500,000 fine for sexual harassment.
The company has announced it is reviewing the group’s assets and businesses to “assess all options” for its strategy.
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