Speculation is mounting that GIC – the partner of NorthWest Healthcare Properties in its attempted buyout of the $2.8bn Australian Unity Healthcare Property Trust – is getting cold feet and now hopes to stage a graceful retreat.
NorthWest and the Singapore sovereign wealth fund have already locked up a 16 per cent stake held in the fund by the wealthy Scanlon family.
GIC was offering 70 per cent of the funding for NorthWest’s tilt.
But in recent days, there is real estate industry talk that GIC is unhappy about how matters have transpired in the battle and is now keen to wave the white flag.
NorthWest and Australian Unity are currently in a legal battle over the Canadian group’s hostile pursuit by of the Australian healthcare business.
The talk in the market started heating up after an article by columnist Robert Gottliebsen in The Australian on June 23 suggested that the Singapore government state-owned enterprise GIC had exploited a loophole in Australia’s takeover investor protection laws.
Gottliebsen said 13,500 Australian retail investors in the $2.5bn unlisted healthcare fund were potentially being forced to accept a price substantially lower than what the Singaporeans had offered the 16 per cent equity holder – the Hume investment fund controlled by the Scanlons.
Hume in December agreed to sell GIC and its Canadian-owned Australian hospital owner NorthWest units for at least $2.90 per wholesale unit and potentially up to $3.05.
At the time, the trade was not fully disclosed.
Three months later, NorthWest lobbed a $2.20 per share wholesale unit bid for the rest of the investors, with GIC in the background funding the deal.
The price has now escalated to $2.70 after Australian Unity consistently rebuffed four separate proposals, but with the offer now valuing the fund at $2.8bn, it is still below the Hume price.
Market observers say that the publicity was likely to have embarrassed the sovereign wealth fund, which prides itself on its friendly investment relationship with Australia, and its hope now is to make a graceful exit.
Greenhill is working for the Australian Unity fund while NorthWest is advised by Goldman Sachs.
Sources linked to NorthWest said that GIC remains committed to the transaction.
As a defensive play, Australian Unity has brought in Dexus Property to embark on a $320m equity raising and take a 7 per cent stake in the fund, while also forming a property alliance.
The meeting to vote on the buyout proposal has been scheduled for July 19, but the battle for control is now being fought out in the courts.
GIC and NorthWest have been demanding that the Hume stock be allowed to vote, but not the stake taken up by Dexus.
NorthWest has launched Supreme Court proceedings against both Australian Unity and Dexus over the deals, which it argued were designed to frustrate its bid.
Australian Unity, meanwhile, is consulting lawyers over the documents it is being sent by NorthWest to ensure they are accurate and investors have enough time to consider them.
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