Melbourne-based Hastings Funds Management has been at the centre of industry talk since it led a global consortium to win the A$10.3 billion ($7.32 billion; €6.6 billion) long-term concession for New South Wales (NSW) TransGrid electricity network, last November.
But the hunter has now become the hunted, with Australian bank Westpac – Hastings’ owner – looking to sell the Australian fund manager. The auction is set to close in weeks and sources close to the sale have told us that US institutional investors TIAA-CREF and Massachusetts Mutual Life Insurance are the two frontrunners to acquire the fund manager.
New York-listed global asset manager Affiliated Managers Group and Chinese state-owned conglomerate China Merchants Group have reportedly expressed their interest in Hastings. The latter, however, is not expected to put in a binding bid by the end of February deadline.
The auction could value Hastings at more than A$500 million, based on the $205 million acquisition of Sydney-based RARE Infrastructure by US asset manager Legg Mason. RARE Infrastructure had about $7.6 billion of assets under management at the time of its sale, while Hastings managed about $8.81 billion in funds and mandates as at 31 December 2015.
It is understood that Westpac, one of Australia’s top four banks, wants to sell Hastings as part of its efforts to boost cash reserves, to comply with new rules on capital requirements for major financial organisations.
Ahead of the sale, Hastings has also undergone a major team reshuffle. Sources told Infrastructure Investor that these changes follow a strategic assessment of the firm’s business model last October, where Hastings implemented an updated organisational structure in a bid to better harness global opportunities.
It is understood that Andrew Day, chief executive of the firm, will oversee the equity new investments team, formerly known as global investments, alongside four regional investment heads.
Andrew Faber will be head of equity new investments in Australia and was promoted to executive director, while Oliver Schubert, also joining the executive committee, will be in charge of Europe. Rob Collins and Stephen Mead will be heads of equity new investments for North America and Asia respectively.
Hastings’ global asset management team will be renamed as equity asset management and led by Steve Rankine, the current global head of infrastructure debt and soon-to-be global head of equity asset management, according to sources. Rankine will chair the asset review committee, join the equity investment committee and retain his existing debt responsibilities.
Andrew Fellowes will be promoted from his current role as investment director to head equity asset management in Australia, working alongside Rankine and current European head Valeria Rosati.
Changes have also happened at Utilities Trust of Australia (UTA), which manages a portfolio of core infrastructure assets, including TransGrid, and is the group’s largest fund. Colin Atkin, the portfolio manager of UTA, has been promoted to global functional lead for portfolio management, business development and marketing.
Reporting to Atkin, Brett Mitsch will join the UTA team as lead portfolio manager in March from Flagstaff Partners, where he worked as managing director. Matthew Lorback, airport sector lead within the equity asset management team, will take over James Fraser-Smith’s position as investment director in the UTA portfolio management team. The appointment comes after Hastings recently announced Fraser-Smith’s resignation, after a 10-year tenure at the firm.
With the reshuffle out of the way, Hastings is now free to pursue new deals. In fact, the fund manager is said to be eyeing a bid for Port of Melbourne, although it is unlikely to pursue two other electricity networks privatisations in NSW – AusGrid and Endeavour Energy.