The billionaire family that controls Washington H. Soul Pattinson is poised to make a fresh push into asset management with plans to launch a listed investment company (LIC) that will invest in assets poised to benefit from urban renewal.
It is understood the investment managers are seeking to raise $300 million, which will be invested in a mixture of direct property and equities in order to capitalise on the themes of urban regeneration and renewal.
The vehicle will be externally managed by Contact Asset Management chief executive Tom Millner and portfolio manager Will Culbert. Mr Millner is the son of Robert Millner, chairman of the Washington H. Soul Pattinson conglomerate and related entities. Washington H. Soul Pattinson is expected to be a cornerstone investor in the listed company.
The LIC is expected to invest in eight to 10 properties and a concentrated portfolio of 20 to 30 equities.
The target asset mix will be 20 to 50 per cent Australian equities, 30 to 50 per cent unlisted property and 5 to 20 per cent cash and fixed interest for the funding of future acquisitions.
To be named URB Investments, the managers have identified 89 Australian stocks they believe offer exposure to the urban renewal theme.
Among the forces it is seeking to harness are Australia’s growing population and a renewed focus on infrastructure, education, healthcare and population density.
Equity in the $20 billion toll road operator Transurban has been earmarked as a likely candidate for the fund. A presentation obtained by The Australian Financial Review states that the properties will leverage the expertise of the real estate advisory division of Washington H. Soul Pattinson, Pitt Street Real Estate Partners.
According to the presentation, Pitt Street Real Estate Partners has generated attractive returns for the company.
Commercial property assets bought by the fund will be bought as close to the approaching inflection point in valuation as possible.
The listed investment company is being pitched as a unique way for investors to gain exposure to property deals that were previously available to only developers and institutional investors.
The vehicle will aim to deliver a fully franked yield of 4 to 5 per cent. This will be the second deal for Contact Asset Management, which took over the management of listed investment company BKI Investments in September last year. BKI has a market capitalisation of $989 million. Contact charges BKI unitholders a fee of 10 basis points per annum and no performance fees, which is in line with other leading listed investment companies such as Australian Foundation Investment Company and Argo Investments.
It is understood that a priority offer will be extended to existing shareholders in Washington H. Soul Pattinson and BKI Investments.
A “loyalty option”, whereby shareholders are rewarded after holding the investment for a set period of time, is also being considered.
The fund will charge a fee of 50 basis points per annum and a performance fee equal to 15 per cent of any return above 8 per cent as measured by pre-tax net tangible asset valuation.
The impending launch comes hard on the heels of Washington H. Soul Pattinson’s decision to swoop on boutique funds manager Hunter Hall in buying a 19.9 per cent stake in the business from founder Peter Hall after his resignation late last month.