Pressure mounts for IFM Investors to buy ISPT

IFM executives will likely take over from the duties carried out by those at the top of ISPT.

ISPT’s shareholders are understood to have lost patience with its board and management, placing pressure on the real estate manager to allow the superannuation funds management giant IFM Investors to take over.

DataRoom reported in January that a deal was in the works, but that it had been slow going.

Now it is believed to be getting close, with investment bank Citi in the corner of ISPT and Jarden working for its investors, while Macquarie Group is helping IFM.

The deal is being pushed by ISPT’s investors, say sources, with one of the pressing matters centring on property valuations and a concern from IFM being whether they were being accurately reflected in its books.

IFM executives will likely take over from the duties carried out by those at the top of ISPT.

IFM Investors has about $200bn of assets under management and ISPT has about $21.5bn of funds under management with 140 properties, so the deal is considered small for the former.

The understanding is that the two groups have been in discussions about a tie-up for well over a year, as reported in January, and had been progressing towards a deal that is expected to be a merger of equals.

A “friendly discovery” had taken place between the two groups to determine whether a tie-up worked.

More than 80 per cent of shareholders within IFM Investors and ISPT are the same, hence the logic in bringing them together.

A combination will replicate the same model as AMP Capital – since sold to the country’s largest office landlord Dexus Property Group – providing the opportunity for investors to gain investment exposure to real estate and infrastructure through one business.

The deal is happening at a time when ISPT will increasingly be competing with its own clients.

It was set up as a collective for super funds to manage property, but now a lot of those groups are managing their investments in-house.

The key players in the transaction had been ISPT chairman Rosemary Hartnett but she was replaced this year with Andrew Elliott. IFM chair is Cath Bowtell.

At IFM, JPMorgan head of Australian investment banking Grant Dempsey is a director, while Telstra, QBE director and ex-chair of AMP Capital, Ming Long, is on the board, as is ex-Suncorp and Virgin director Lindsay Tanner.

ISPT owns office, retail and industrial properties along with a raft of Australian police stations.

Among the sorts of flagship assets IFM Investors owns are interests in Perth, Sydney and Adelaide airports, Indiana Toll Road in the US and Melbourne’s Southern Cross Station, as well as other utilities assets domestically and globally.