IFM Investors is believed to remain deep in due diligence to acquire super fund real estate manager ISPT in what could have broader implications for the infrastructure and real estate sectors.
IFM Investors has $200bn of assets under management and ISPT has $21.5bn of funds under management with 140 properties.
The understanding is that the two groups have been in discussions about a tie up for almost a year and are progressing towards a deal that is expected to be a merger of equals.
Sources say that a “friendly discovery” was taking place between the two groups to determine whether a tie-up works.
More than 80 per cent of shareholders within IFM Investors and ISPT are the same, hence the logic in bringing them together.
A combination would 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 that 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 are ISPT chairman Rosemary Hartnett and IFM chair Cath Bowtell.
Within IFM’s boardroom, there’s plenty with experience getting their head around a mergers and acquisitions deals.
Former 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.
There’s little colour so far on the likely price that IFM will pay for ISPT, but there’s a lot of curiosity in the market on what it will mean for ISPT’s executives, where some are wondering whether it could mean job cuts are on the cards.
In the past week, ISPT announced a new role had been created – head of mandates – that has been awarded to former Future Fund unlisted property head Doug Cain.
Mr Cain will be responsible for driving investment performance across ISPT’s mandates business.
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.
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