Speculation on the timing of block trades has always been a favoured sport in financial circles. A steady share price increase often signals an imminent move and so it’s no surprise listed warehouser Goodman Group is back at the top of the watch list.
China’s sovereign wealth fund, China Investment Corporation, owns almost 9.9 per cent of the stock and has little interest in holding it for the long term, given its stated preference for direct real estate exposure. An exit then is inevitable. The question is when.
According to investor sources two banks pitched CIC for a mandate last week but were rebuffed.
While this may reflect CIC’s determination to retain the exposure in the short-term, others believe the fund may already have drafted in a bank. Goldman Sachs, which executed a $521 million exit in December 2012 for CIC, remains in pole position for a second trade.
That deal, equating to 6.9 per cent of Goodman’s register, more than doubled the Chinese funds’ initial investment made in 2009 when the ructions unleashed by the global financial crisis forced the property landlord into a deeply discounted equity raise. CIC also helped prop up the trust with the purchase of a hybrid note that converted to equity.
Goodman’s share price rise has been substantial. Goodman’s security price closed last night at $5.73 and many in the market expect the trust to breach the next psychological price barrier of $5.80. If it breaches that level talk about a looming exit by CIC is likely to hit fever pitch.
Hedge funds are also keeping a watching brief on Spotless, the cleaning and catering contractor that was listed earlier this year by Pacific Equity Partners. While the private equity firm agreed to lock up its stake until the release of the 2015 financial year results, in-built trigger points mean part of the escrow may lapse next week.
This article first appeared in The Australian Business Review.