Charter Hall eyes infrastructure market

Charter Hall eyes infrastructure market

16 June 2017

Integrated property heavyweight Charter Hall Group is aiming to transform itself into a fully-fledged manager of real assets by buying infrastructure platform Hastings Funds Management, reports the Australian Financial Review.

The deal, if successful, would lift Charter Hall’s portfolio to almost $32 billion and raise it into the ranks of Australia’s major investment managers, such as Queensland funds giant QIC and diversified manager AMP Capital.

The Hastings platform, Westpac Banking Corp’s infrastructure investment arm, manages about $10 billion in equity investments in infrastructure. Its global portfolio comprises airports, rolling stock, seaports, social infrastructure, toll roads and utilities.

It also operates Melbourne and Perth airports, the ports of Newcastle and Portland, toll roads in NSW and Texas, and water and energy facilities in Australia, California, Northern Ireland and the south of England.

In addition, last April, Hastings signed a $2 billion-plus deal to operate NSW’s land titles and registry business. The platform also manages infrastructure debt capital, worth about $2.7 billion.

While Charter Hall is new to managing infrastructure investments—and especially debt capital—it would make a natural extension of its current activities, says the AFR.

Quoting Macquarie Bank research analysts, The Australian reports that the potential deal could be worth in the range of $150 million to $360m, an average of 10 to 12 times Hastings earnings of $15m to $30m.

“This would be a company-transforming transaction for Charter Hall, combining two similar skill sets in two asset classes that are increasingly being viewed as one,” said the Macquarie research note.

“We can see the merits in Charter Hall extending its significant domestic and international property investor relationships and retail distribution channels into new infrastructure opportunities.

“The rationale for combining two fund managers with specific experience in each sub-sector appears reasonable.”