The listed Investa Office Fund is yet to decide whether it will join with the Investa Commercial Property Fund to jointly buy the management rights of the entire $9 billion Investa Office platform.
The $2.5bn IOF yesterday announced it was engaging with the wholesale ICPF, which is in a leading position to buy the Investa Office management rights being sold by Morgan Stanley. The rights, worth over $110 million, will give it ownership of the management of ICPF and IOF, as well of $2.45bn worth of office towers that China Investment Corporation bought from Morgan Stanley in July.
There was speculation this week that the two funds would jointly buy the management rights, but it is understood this is not yet decided, and the matter was not raised at this week’s ICPF annual meeting.
Any decision will have implications for both funds, with some analysts arguing that IOF is still a ripe takeover target.
“I still think IOF is in play despite having a pretty strong run recently,” CLSA analyst Sholto Maconochie said.
If ICPF buys the platform’s management rights it would be a unique case of a wholesale fund managing a listed one.
JPMorgan analyst Richard Jones said a sale solely to ICPF or IOF would be a cleaner deal than splitting the ownership of management rights between the two funds. “A joint purchase would likely make a potential future separation more complex,” he said. “The management being held by one of the funds seems cleaner.
“The funds’ futures are independent of each other, and the funds’ life won’t necessarily be the same duration due to potential future wind-up, privatisation, listing M&A et cetera.”
It remains to be seen how management roles would be split, with Investa Office chief executive Campbell Hanan and ICPF fund manager Peter Menegazzo likely to take on senior positions.
“The Independent Board Committee (IBC) is aware that Morgan Stanley have agreed a non-binding term sheet with ICPF and granted them a period of exclusivity to potentially acquire the platform,” IOF said in a statement to the ASX yesterday.
“The IBC and its advisers have engaged with ICPF and will continue to do so as part of the ongoing strategic review which continues to explore all options with respect to the ongoing management and ownership of IOF.”
ICPF is being assisted by Grant Samuel, IOF is being advised by Macquarie Capital and Fort Street Advisers, while Morgan Stanley is being advised by its own banking team and the Tim Church-led team at UBS. Mirvac and LaSalle Investment Management were earlier short-listed by Morgan Stanley to buy IOM, and the listed group was deemed an acceptable alternative manager by ICPF.
This article first appeared in The Australian Business Review.