Challenger fund discloses management agreement

Challenger will be one of the first ASX-listed infrastructure funds to enhance its public disclosures following a critical report by corporate governance advisor RiskMetrics that urged the exchange to require full disclosure of such agreements.

Challenger Infrastructure Fund, a fund managed by Sydney-based Challenger Financial Services Group, has disclosed its management agreements and fee sharing deed.

Challenger is one of the first funds listed on the Australian Stock Exchange to disclose its management agreement in the wake of rising criticism of the exchange’s public disclosure requirements.

Last month, corporate governance advisor RiskMetrics, published a critical report urging the ASX to increase its disclosure requirements on publicly listed asset vehicles such as those managed by Challenger, Macquarie Group and Babcock & Brown.

Although Challenger’s actions may put pressure on other listed fund managers to disclose their management agreements, it is unclear whether Macquarie Group and Babcock & Brown will take immediate steps to do so.

The ASX had issued recommendations on 29 August that listed funds should offer a “clear and concise summary” of their management agreements in their initial public offering documents, but stopped short of requesting that they be disclosed in their entirety.

In compliance with the ASX guidelines, Challenger had previously disclosed summaries of its Challenger Management Services Limited management agreement, its UK management agreement and fee sharing deed on its website.

RiskMetrics recommended that management agreements be made public so that investors in listed funds would know if the removal of the manager or a proposal to close the fund would set off contractually mandated preemptive asset sales, debt covenants, performance fees or other terms and conditions that block or impediment takeover actions.

The ASX was home to 23 listed infrastructure funds with an aggregate market capitalisation of A$34.5 billion ($29 billion; €20 billion) as of the end of last August, according to exchange documents.