Westpac suspends Hastings sale

The Australian lender, which hoped to sell the fund manager for more than A$500m, is said to have received bids that were far below its expectations.

Australia's Westpac Banking Corporation has dropped discussions with firms interested in buying Hastings, the Melbourne-based fund manager. 

“For various reasons, including current external market conditions, Westpac and the relevant parties have elected to cease strategic conversations and due diligence with respect to a possible purchase of Hastings,” the lender said in a statement. 

Westpac described Hastings as “a high quality and unique business with a number of international strategic alliances” and said that it has a sound business strategy in place.

TIAA-CREF and MassMutual Financial Group, two US asset managers reportedly leading in the race, had offered indicative bids for Hastings. These equated a price earnings multiple of less than eight to 10 times – far below the multiple on which listed fund managers trade, according to local press reports.   

The multiple also represented a far weaker ratio than Sydney-based RARE Infrastructure generated when it was acquired for $205 million by the US' Legg Mason last year, reports said.

Westpac had hoped to sell the infrastructure fund manager for over A$500 million ($361 million; €332 million) but this ambition now seems “unrealistic against the current economic backdrop”, sources told Infrastructure Investor. The bank is likely to mull a sale later in the year, the people said, potentially to a local rival such as Macquarie

Westpac and Hastings declined to comment on the bids and future sale, but Westpac added that “Westpac will retain its disciplined approach to M&A and will consider its options carefully while continuing to support Hastings.” 

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.