Dexus wins Collimate battle but funds war goes on

There is a vote on Thursday to update the constitution of the prized near $8bn AMP Capital Wholesale Office Fund, which is part of the Collimate stable. Picture: NCA NewsWire / Steven Saphore

The initial battle for the Collimate Capital empire has been won by Dexus, with it picking up the management of $28bn worth of local real estate and infrastructure funds.

But the fight to keep them may have only just begun, with a key vote due on Thursday to update the constitution of the prized near $8bn AMP Capital Wholesale Office Fund, which is part of the Collimate stable.

This would then allow the manager to be changed with a 50 per cent vote, and this is certainly where the action is.

Long-time fund suitor Mirvac is not going anywhere, after going through a rigorous manager selection process for more than a year.

It now wants its claims to run the fund to be heard, preferably by an independent arbiter.

After some behind-the-scenes tussling, it can lay claim to majority support of the mainly Australian superannuation funds that invest in the vehicle.

A widely touted figure of an initial 53 per cent support for its mid-April entreaties to manage the fund could be higher than thought. Dexus had chipped away at the level with a 20 per cent reversal on the register mooted on its promise of stability and getting the funds to grow again.

But a further 30 per cent of the office fund register had more softly indicated it would fall into the Mirvac column. And on the eve of the sale of the platform to Dexus (which re-energised the debate), about 57 per cent of the register was said to be supportive of Mirvac.

Competing claims abound, with Dexus hoping that momentum has swung towards staying with existing management as it finds a new home. AMP will want the same as it will receive less on the sale if the funds take flight.

 

The big funds are laying their cards on the table. UniSuper is decamping from the Collimate Capital platform, and is awarding a $2.5bn-plus mandate to GPT. It is also a big investor in the office vehicle, which owns stakes in Sydney’s Quay Quarter Tower and 33 Alfred St, and is now thought to be favouring Mirvac. Others are keeping an open mind on Dexus. The battle will come down to whether weary ex-AMP Capital investors are willing to endorse a switch to Dexus on the basis of much yearned for stability and access to its development pipeline, or if they go for a cleancut bid from Mirvac, which was short-listed as one of three final options last year. The remaining plays of staying with the demerged Collimate Capital platform or a merger with GPT’s office fund are both off the table.

The contest puts the fund’s trustee board in a delicate position as some members are headed over to the Dexus platform and superannuation funds are pushing for an independent process.

While Dexus is keen to keep the fund and confident it will do so, it is protected by an earn-out provision in the Collimate Capital deal. What is likely to follow is the ultimate exercise in investor democracy, with big funds to choose between long-time suitor Mirvac and platform buyer Dexus.

The battle has been joined and could be definitive in determining whether the platform deal is transformative for Dexus as hoped.

The funds management platform was acquired on a 12 times earnings multiple and the co-investment stakes would yield about 4 per cent. Dexus expects the transaction to be accretive to adjusted funds from operations in its first full year.