Australia’s mega-funds battle heats up

The $82bn Future Fund has rejected claims from AustralianSuper, the country's biggest superannuation fund, that it had knowingly overpaid for a stake in Perth airport.

Two of Australia’s largest investors are engaged in a legal dispute over the price of a high-profile transaction sealed at the end of last year.

The battle, waged this week in the Supreme Court of Victoria, pits the AUD$91.7 billion (€51.5 billion; $81.7 billion) Future Fund to the AUD$65.3 billion AustralianSuper. Future Fund is the federal government’s long-term investment arm, while AustralianSuper is the country’s biggest superannuation fund.

The dispute focuses on the price paid last November by Future Fund for a stake in Perth Airport, in which AustralianSuper is also a shareholder. AustralianSuper claims the institution deliberately priced it out of increasing its 5 percent stake by ascribing an unrealistic premium to its target.

Future fund disbursed AUD$875 million for a 29.7 percent stake in the airport – AUD$128 million more than the highest value reportedly set by independent advisers – as part of a AUD$2 billion offer to acquire assets from Australian Infrastructure Fund (AIX), the Sydney-listed investment vehicle formerly managed by Hastings Funds Management.

AustralianSuper did not give a figure in the writ it lodged in the Court last week. The institution, which estimates it lost up to AUD$33.5 million as a result of Future Fund’s purchase, had previously sought damages in the region of AUD$100 million.  

Future funds rejected the accusations, stating that it was “confident in its position and will vigorously defend this case” in a statement issued last week. 

“By making an offer of $2 billion to acquire AIX’s assets and in the end securing around half of the total, this transaction unlocked value for AIX shareholders and the many other investors in the assets, which included a range of airport assets across Australia and internationally.”

Hastings announced it had completed the sale of all the assets of Australia Infrastructure Fund last April.