IFM Investors, the industry super fund-owned investment manager, will consider buying up listed companies and taking them off the stock exchange, as it looks for new ways to invest its growing pool of funds.
IFM revealed on Monday it had increased its funds under management to $107 billion over the 2017-18 financial year, an increase of 15 per cent.
Set up 22 years ago to invest the pooled assets of super funds in specialist areas such as infrastructure and private equity, IFM has rapidly expanded its assets as the superannuation pool in Australia has grown.
It now owns 30 large infrastructure assets across Australia, Europe and North America, including ports, railways stations, shopping centres, electricity networks and toll roads.
Its Australians assets include Southern Cross Station in Melbourne, Port Botany in Sydney, law courts in Perth’s CBD, and Adelaide, Brisbane and Darwin airports.
It also owns a number of private companies, including medical software company Genie Solutions, handbag maker Colette and furniture retailer Focus on Furniture.
All these have made IFM the biggest investor in Australian infrastructure and the third-biggest investor in Australian private equity.
That’s alongside its traditional listed equity holdings and $30 billion of debt holdings.
IFM Investors chief executive Brett Himbury told The New Daily the fund’s growing scale and increased diversity meant it could take on large investments that would be too risky for smaller players.
“We’re now looking at a small number of enterprises that are in public hands that might be more valuable in private hands,” Mr Himbury said.
This, he said, would involve buying up a publicly listed company, de-listing it and running it as a private concern – harnessing not only IFM’s investment experience, but also its experience managing enterprises.
He said IFM had already made such moves with publicly-listed infrastructure companies – Spanish firm OHL Group being a case in point – and would now look to make similar moves in other sectors.
With the banking royal commission turning its attention to superannuation next month, the way in which superannuation funds allocate funds to IFM Investors is likely to come under scrutiny.
An article in Fairfax last week carried allegations by a former employee that AustralianSuper had “pressured” him to allocate funds to an property investment fund, ISPT, that had been set up by AustralianSuper.
AustralianSuper has categorically rejected the allegations. Nevertheless, there is a good chance the royal commission will question the links between super funds like AustralianSuper, and the fund managers they joint own with other super funds, IFM Investors being the biggest example.
But Mr Himbury insisted every mandate awarded by a super fund to IFM Investors came only after “extensive” due diligence from the funds’ investment committees.
“We always have to earn the right to manage other people’s money. Of course we do. It’s not our money,” he said.
“I’d argue that the level of due diligence is right up there with any international manager. In many instances it eclipses the due diligence of other investment managers.
“But the results speak for themselves. We clearly deliver.”
He also argued the fact that large numbers of international pension funds and other institutional investors with no stake in IFM were awarding mandates was evidence they were a strong contender.
IFM Investors now has 312 institutional investors in 19 countries. The business saw its pre-tax profit margin increase to 25 per cent last year, and it is now independently valued at $869.5 million – an increase of 20.2 per cent per annum over five years.
The New Daily is owned by Industry Super Holdings, which also owns IFM Investors