The deep alignment of interests that IFM Investors Pty Ltd. has long maintained it shares with its superannuation fund owners might be fraying.
The Melbourne, Australia-based infrastructure investment heavyweight on April 23 found itself outbid for a marquee Brisbane toll road property by a consortium that included IFM's biggest owner-client: the A$75 billion (US$69.3 billion) industry fund AustralianSuper, also of Melbourne.
That intersection of collaboration and competition for IFM and AustralianSuper is one result of continuing efforts by superannuation funds to squeeze scale benefits from the rapid growth of their investment portfolios, fueled by mandatory annual employer contributions of more than 9% of employees' salaries.
Those efforts — focused on building in-house management teams that can take greater control of investments in unlisted assets such as real estate and infrastructure — should leave IFM facing growing pressure to diversify beyond a business model anchored on commingled fund vehicles, industry observers predict.
In a recent interview, Brett Himbury, IFM's chief executive, conceded the need to evolve to serve clients looking to put more money to work in infrastructure at lower fees, while becoming more involved in the deal origination and management process as well.
But he argued that evolution is well underway. A case in point: last year's winning A$5.1 billion bid by an IFM-led consortium for a 99-year lease on two ports in the state of New South Wales.
For that deal, Mr. Himbury said, AustralianSuper, in addition to making an investment in an IFM-sponsored commingled pool, took a direct partnership stake in the consortium. Three other Melbourne-based superannuation funds with a combined 25% stake in IFM — A$26 billion Cbus, A$27 billion HESTA and A$15 billion HOSTPLUS — made co-investments as well as pooled investments.
For the just-concluded Brisbane auction, AustralianSuper — IFM's largest shareholder with a 50% stake, as well as its largest client, accounting for more than A$18 billion of the firm's A$52 billion in assets under management — committed 25% of the winning A$7.06 billion bid.
Other consortium members were Transurban Group Ltd., with a 62.5% stake, and Tawreed Investments Ltd., a unit of the US$627 billion Abu Dhabi Investment Authority, with a 12.5% share.
(Well over half of the more than A$18 billion IFM manages for AustralianSuper is in IFM's non-infrastructure business segments, including private equity, indexed listed equities and cash.)