Canadians relentless pursuit of Australian Unity fund

Canadians relentless pursuit of Australian Unity fund

After the Australian Unity Private Health Insurance bluntly rejects $2.5 billion bid for its unlisted healthcare real estate fund from Canada’s NorthWest Healthcare Properties in March, the Canadian investment platform NorthWest Healthcare Properties has stepped up its pursuit of Australian Unity’s unlisted healthcare real estate fund, following up on its sweetened $2.7 billion bid by dropping previous conditions and urging the fund manager to engage with the bid.

The Australian Unity Insurance defended their refusal to engage further with the sweetened takeover bid during an investor webinar in March because the fund manager, acting in the best interests of the board, concluded that the higher offer still fell well short of the portfolio’s value after he set out some detail of the fund’s $1 billion development pipeline.

In May, however, Backed by Singaporean sovereign wealth fund, GIC, Canada’s NorthWest Healthcare Properties sweetened its bid for Australian Unity’s unlisted healthcare real estate fund after two rejections, taking the offer to around $2.7 billion in total. It represents a like-for-like increase of 35¢ per unit from NorthWest’s initial proposal in February and a hefty 30 per cent premium to the undisturbed unit price.

The unlisted healthcare property fund holds a 62-asset portfolio of medical and health-related properties. Its register is dominated by small-scale retail investors, who are typically focused on the 5.03 per cent distribution return they are receiving.

Australian Unity quietly posted the revised offer of $2.55 per wholesale unit on its website late on Tuesday afternoon and the board of Australian Unity Funds Management (AUFM) has said it will assess the offer and determine whether it was in the interests of the fund’s 10,000 or so unitholders to engage.

An offer letter noted that the sweetened offer reflected the impact of independent property valuations of the portfolio undertaken in April, following NorthWest’s second bid in March, a $2.35 per unit bid, worth about $2.5 billion in total, after lobbing its initial offer of $2.20 in February.

NorthWest’s chief executive for Australasia, Craig Mitchell, said the sole condition of the latest offer is the recommendation of AUFM’s board. It was not conditional on due diligence or financing and Foreign Investment Review Board approval had now been obtained, he said. “Yet, once again, AUFM is giving every indication that it will not even engage with us to discuss our offer,” Mr Mitchell said. “Through its actions, AUFM is not only denying its unitholders the right to even consider our proposal, is it pursuing options that could prove financially detrimental to existing unitholders – all to protect its management fees.”

Mr Mitchell also called for the establishment of an independent committee to evaluate NorthWest’s offer, to avoid potential conflicts of interest.


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