MELBOURNE, Australia--U.K. asset manager Northill Capital is buying Westpac Banking Corp.'s (WBC.AU) Hastings Management unit, an investment manager with US$11 billion invested in global infrastructure from toll roads to airports and ports.
The acquisition is Northill's first foray into Australia. It is a bet on investor appetite for backing infrastructure projects world-wide as governments spin off existing assets and spend on new roads, electricity grids and ports in an effort to drive economic growth.
On Friday, Northill said it agreed to buy majority control of Hastings. The Australian business's management team will retaining an equity stake. Financial terms weren't disclosed, although a person familiar with the negotiations valued the deal at between 150 million and 160 million Australian dollars (US$116 million to US$123 million).
Hastings invests on behalf of institutional investors in a infrastructure equity and debt. It has interests in owners of airports including Melbourne Airport, seaports such as Port of Newcastle in eastern Australia and Northern Ireland gas distribution company Phoenix Natural Gas.
In February, Hastings bought the outstanding 50% stake in British utility South East Water on behalf of clients including investors within Canada's Desjardins Group. A month later, it secured a debt-investment agreement with Development Bank of Japan Inc. and its DBJ Asset Management Co. arm to target investments in member nations of the Organisation for Economic Cooperation and Development.
"Infrastructure is an attractive asset class...most pension funds are underinvested in infrastructure," Jonathan Little, founding partner at Northill, told The Wall Street Journal.
Westpac had been seeking to exit Hastings for some time. It failed to clinch a deal to sell Hastings to Charter Hall Group; exclusive talks with the Australian property investor broke down in August. Hastings accounts for only a small slice of the bank's overall earnings and the exit isn't considered material.
Countries around the world are making bold plans for infrastructure investment. As a candidate, President Donald Trump promised a US$1 trillion infrastructure-spending package, which has encouraged investors to target related funds. Australian federal and state authorities have been selling billions of dollars worth of ports, roads and electricity assets in recent years to help fund investment plans, drawing bids from global pension and sovereign-wealth funds interested in well-regulated and reliable revenue generators.
Northill's Mr. Little said his company had been interested in infrastructure and in Hastings for some time, attracted by the opportunity to develop the business.
The immediate priority for Northill will be to consolidate the business but it would then be prepared to inject capital for growth in opportunities in Europe, the U.K. and possibly the U.S., Mr. Little said.
Northill invests in asset managers, providing seed capital to start-ups and funds to replace existing shareholders in established businesses. Founded in 2010 by Mr. Little, a former BNY Mellon Asset Management vice chairman, with the financial backing of the Bertarelli family, it has assets under management of about US$48 billion. The Bertarellis, heirs to Swiss biotech company Serono SA, which was sold to Merck in 2006, are among Europe's richest families.
The firm's strategy is to take majority interests in firms, with the support of management. It is expected that Hastings management will, in time, target a collective stake of between 15% and 20%, Mr. Little said.
Founded in Melbourne in 1994, Hastings has offices in Sydney, London, New York, Singapore and Seoul. Westpac bought 51% of the company in 2002 and the remaining 49% in late 2005. In September, the fund manager named board member Terry Winder, a former Westpac executive, as its chief executive.
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(END) Dow Jones Newswires
November 02, 2017 23:28 ET (03:28 GMT)