Macquarie Asset Management is set to hold a unitholder vote on a proposal to wind up The Infrastructure Fund, the open-end vehicle that was previously managed by Hastings Funds Management, and sell all its assets, Infrastructure Investor understands.
The timing of the vote has been under discussion, but a source familiar with the process said it would now be held in early 2024.
As part of the proposal, MAM would have a five-year window in which to sell the fund’s assets in what one source described as “an orderly and managed process”.
Infrastructure Investor understands that discussions have been underway for some time about potential liquidity options for investors and the future of the fund, with the weight of redemption requests from LPs now forcing the issue.
MAM declined to comment for this story.
The decision by MAM to try and move towards winding up TIF follows a string of redemption requests submitted by the fund’s investors over the last few years, such that the redemption queue stands at more than 50 percent of the fund’s total assets under management.
Infrastructure Investor previously reported that Australian Retirement Trust, Cbus Super and Hostplus are among the funds that have put in redemption requests.
The primary dynamic driving the redemption requests has been consolidation in Australia’s superannuation sector. Among TIF’s unitholders, 70 percent are Australian superfunds and, of those, 75 percent have merged in the last five years.
This has led many funds to try and rebalance their portfolios, particularly in instances where a merger may have resulted in picking up a duplicate exposure to a given asset or fund, as well as funds having different weightings in their asset allocations to certain types of assets, especially Australian transport assets.
TIF’s exposure to Australian airports and the Port of Newcastle have proved to be sticking points, with multiple sources saying previously that they had sufficient exposure to Australian airports through other investments already, and that the Port of Newcastle’s coal exposure had become less attractive.
A stake in one of TIF’s assets, Queensland Airports Limited – which owns airports on the Gold Coast and in Townsville, Mount Isa and Longreach – is currently on the market and is expected to fetch a strong valuation due to the governance rights that will come with it.
A source familiar with TIF said it had achieved a net IRR of 9.6 percent over the last three years, as well as a 10.4 percent net IRR for FY23 and a 12.9 percent net IRR in FY22. It also achieved a yield of around 4 percent in FY23.
Previous assets from TIF have generated a premium of around 20 percent to net asset value, on average, according to a source familiar with those sales, including stakes in UK rolling stock company Porterbook, Royal Adelaide Hospital PPP consortium Celsus, and Sydney Desalination Plant.
TIF was established in 1998 with an investment in Gold Coast Airport before the now-defunct Hastings Funds Management took over in 2000.
After Hastings’ collapse, MAM assumed management of the fund in 2018. TIF now has a little more than A$2 billion in AUM.
Hastings’ other flagship open-end core infrastructure vehicle, Utilities Trust of Australia, is now managed by Morrison & Co.