US firms frontrunners in Hastings sale

Expected to close in a few weeks, the auction may value the Westpac-owned fund manager at more than A$500m.

A competitive process to sell Hastings Funds Management, an asset manager owned by Australian bank Westpac, is only weeks away from reaching a close, Infrastructure Investor can confirm. 

Sources with knowledge of the matter said that TIAA-CREF and Massachusetts Mutual Life Insurance, two US firms, are currently leading the run to acquire the Melbourne-based fund manager.

Executives from Westpac and Hastings were recently in New York for the sale of the business, according to local reports, likely visiting executives of TIAA-CREF – the company that has been tipped as the most likely winner. 

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 make a binding bid by end of this month. 

Sources said that the stake Westpac holds and intends to sell accounts for about 70 percent in the business, with the rest owned by Hastings employees, who are expected to retain their share.

No valuation has been disclosed for Hastings, but it is understood that the business could fetch a price tag of more than A$500 million (€320 million; $358 million), based on the $205 million acquisition of Sydney-based RARE Infrastructure by US asset manager Legg Mason.

It is understood that Westpac, one of Australia’s big four banks, is trying to cash out from Hastings as part of its efforts to boost cash reserves so as to comply with new rules on capital requirements for major financial organisations. 

Both Westpac and Hastings declined to comment on the sale process. 

Hastings last November led the global consortium that won the A$10.3 billion concession for New South Wales’ electricity grid. As of 31 December 2015, the firm managed about A$12.4 billion in funds and mandates. The firm’s clientele totals some 70 institutional investors. 

Westpac bought into Hastings in 2002, paying A$36 million at the time for a 51 percent stake.