The Australian superannuation funds that launched infrastructure and domestic property investment boutiques more than 20 years ago are moving to extend that ownership model to a new venture focused on overseas property.
On April 26, IFM Investors, an infrastructure-focused manager owned by 27 super funds, and Industry Super Property Trust, an Australian property manager owned by 31 funds, announced a 50-50 joint venture to invest in international property.
Analysts say the ownership structure of the joint venture — to be called International Property Funds Management when it launches in the third quarter — should boost its prospects of success.
"I think the model is highly attractive and a great compromise" between bringing management of assets in-house — as a number of the biggest super funds in Australia are doing now — and hiring external managers, said Josef Pilger, Sydney-based global pension and retirement leader with Ernst & Young Global Ltd.
Ownership by super funds is likely to give IPFM an advantage, provided it can prove itself to be a best-of-breed manager, "much like IFM has done in the unlisted infrastructure space," agreed Sandhya Chand, managing director with Sydney-based money management industry consultant Peter Lee Associates Pty Ltd.
Tony McCormack, the former head of capital transactions at Industry Super Property Trust who's been named CEO of the new venture, said in an interview that the new entity's "not-for-profit" ownership structure will allow the firm to offer clients a highly competitive fee structure and a culture focused on meeting their needs.
That could come in handy in an Australian market where lowering money manager fees has been a blood sport in recent years.
There's no doubt that the market environment is "materially different from even a decade ago," with the level of competition for specialist asset managers arguably at an all-time high, and competition from internal super fund investment teams adding to heightening fee pressures, said Ms. Chand.
Even so, a number of the venture's super fund owners are not building internal teams at present so there's likely to be "reasonable demand" for IPFM's capabilities, she said.