Brett Blundy backs Aventus growth after $143m deal

Retail billionaire Brett Blundy is to back the expansion of the listed Aventus Retail Property Fund.

Brett Blundy and Darren Holland in Sydney. Picture: James Croucher

Retail billionaire Brett Blundy will back the expansion of the listed Aventus Retail Property Fund after investors yesterday approved the $143 million purchase of the trust’s management company despite a substantial protest vote.

The internalisation deal — which delivered Mr Blundy about $96.5m for his stake in the management platform, with Aventus chief executive Darren Holland picking up about $46.6m for his interest — drew a 28 per cent ­protest vote as it was opposed by a group of Melbourne-based ­investors.

The proposal to internalise management was labelled as “overpriced” by broker CLSA as it delivered a lift of just 1.1 per cent in funds from operations this year, and it warned that the trust would have to cut its gearing.

There were no questions at a Sydney meeting on the transaction, on which about 53 per cent of the register voted, with Mr Blundy, who held 29 per cent, unable to vote and not attending.

Independent expert Deloitte said the deal was “fair and reasonable” and it was backed by four proxy houses.

Support from passive funds helped it get up, despite the opposition to the price paid from some active managers.

Aventus independent chairman Bruce Carter said the deal would allow the group to become master of its own destiny and said the move had been made as Aventus had grown faster than expected. In only three years it has bought two major portfolios — one from private equity group Blackstone and another from LaSalle Investment Management.

“Along the way, numerous investors, and potential investors, have said that if we’re going to grow at this pace they would seek that we would internalise,” Mr Carter said.

The board first put the deal to Mr Blundy in November last year, when Mr Carter said the group founder had been “ambivalent”, but the billionaire had justified the transaction as being best for the fund in which he held a significant investment. Mr Carter added that the deal resolved a number of governance issues and defended its accretive nature, with metrics to improve as the fund grew.

It also opened the way for related moves in the large format retail industry, including managing funds for third parties, Mr Carter said.

“It broadens the services we can offer and it certainly ties [chief executive] Darren Holland in and removes any appearance of a conflict of interest,” he said.

Mr Holland’s payment for his interest, split between cash and shares, meant his stake in Aventus jumped from 0.5 per cent to 3.2 per cent, while Mr Blundy’s went from 29 per cent to 32 per cent.

Mr Carter said the group was confident it would deliver and was well positioned as it had locked in low-cost, long-term debt. He added that Mr Blundy had not sold a unit since Aventus listed and “he’s certainly a shareholder supportive of growth”.

Investment banks Macquarie Capital and UBS advised on the transaction, with the latter also handling the internalisations of former listed retail players CFS Retail Trust and Westfield Retail Trust.