AMP Capital warns against a “confrontational and captive” plenary session
Earlier this month, the plenary hired CommIF specialist and industry veteran Julie-Anne Mizzi from AMP Capital, then expanded its ranks with a raid of six asset management staff from AMP Capital, who all worked for CommIF. Ms. Mizzi has been tasked with setting up a new fund management business under the umbrella of Plenary Group.
“There is currently no successful PPP managed by a developer / sponsor. [public-private partnership] funds in the Australian market, ”said Bessell.
“Many developers have tried unsuccessfully to raise funds from institutional investors. We understand that these have failed because conflicts of interest become unmanageable and the fund is filled with poor performing greenfield and brownfield assets from the parent company, ”he said.
“Investors did not support these models because they are clearly not aligned to deliver long-term investors’ outperformance.”
As Plenary embarked on entirely new projects, some of which were not yet completed at the time of the investment, including the Gold Coast Tram, the Melbourne Convention and Exhibition Center, the Toowoomba Bypass and the Metro of Sydney, AMP Capital prefers to invest in completed assets to reduce risk investors will see their equity investments demolished by cost overruns and planning incidents
“AMP Capital is not owned or aligned with any developer, which allows us to remain completely independent in performing a detailed due diligence before acquiring new investments,” said Bessell .
“This also ensures that the current contractor / SPV [special purpose vehicle] costs are minimized and in the best interest of the unitholders of the CommIF. On the contrary, the usual business model for developers is to take substantial transaction and management fees of SPV assets throughout the life of a PPP asset, ”he said.
“By maintaining our independence, we are able to buy the best projects from the best sponsors. If CommIF were to align with a single developer, we would expect the flow of transactions in the secondary market to become more limited. “
Earlier this month, the independent committee of AMP Capital’s board, chaired by Ming Long, privately told investors it would be unlikely to recommend a vote to unitholders to decide whether to entrust the management of CommIF to one of the three bidders, but would inform investors towards the end. of the month of its decision.
In the midst of this process, AMP is also revising the constitution of CommIF “to identify areas for improvement” in its services, which Bessell said will be passed on to investors shortly.
Since the withdrawal of CommIF from the Royal Bank of Scotland in 2010, AMP has failed to conduct a full review of the fund’s constitution, at a time when investor expectations regarding consultation levels have changed.
However, market sources believe that AMP Capital may have to lower fees for investors, as Plenary, in its takeover bid for the fund, seeks to lower costs for unitholders.
Mr. Bessell’s letter noted that while AMP was “disappointed” with staff departures to compete with Plenary, it had renewed positions with staff, all of whom had been involved in the acquisition and management of assets. PPP within the CommIF.
Earlier this year, the same committee of AMP Capital’s independent board recommended a change in leadership for the $ 5 billion diversified real estate fund AMP Capital after Dexus made an offer and 93% of investors signed up. voted for change.
The move to move CommIF away from a vote also comes as corporate interest grows in the $ 7 billion AMP Capital Wholesale Office segregated fund, which has been downgraded by S&P Global this month due to higher than expected leverage in client buyouts. Lendlease, GPT, Charter Hall, Investa and Mirvac have all expressed interest in the vehicle.
Plenary was created in 2004 by three investment bankers who parted ways with Dutch giant ABN Amro.
The battle to retain its assets comes as AMP pursues a separate plan to merge AMP Capital’s infrastructure and private markets businesses into a new spin-off company that will be listed on ASX.