Australian Super backtracked on airport valuation: Future Fund
Wednesday, 2 July 2014 12:00am

The Future Fund has accused AustralianSuper of backtracking on its own valuation of the Perth Airport, a dispute which is at the heart of the legal case one of the country's biggest superannuation funds is waging against Australia's sovereign wealth fund.

According to the defence the Future Fund has lodged with the Supreme Court of Victoria, AustralianSuper had previously agreed with the now disputed valuation and it believes AustralianSuper may be pursuing the legal action in a bid to achieve a commercial settlement.

A spokesperson for the Future Fund told Financial Standard that the "Future Fund is pleased to have finally been provided with the opportunity to lodge its defence with the Victorian Supreme Court. We have consistently and strongly maintained that Future Fund has acted appropriately at all times, and we totally reject the allegations of wrongful conduct that have been made.

"Future Fund remains confident in its position and will vigorously defend this matter."

In 2012 AustralianSuper accused the $98 billion Future Fund of breaching a shareholders' agreement in its $2 billion purchase of a stake in Perth airport from Australian Infrastructure Fund (AIX). The Future Fund is alleged to have man­ipulated the bidding process to put an artificially high price on the 29.7% Perth Airport stake to discourage other shareholders from exercising their pre-emptive rights.

AustralianSuper argued that the $875m price reportedly allocated by the Future Fund to the Perth airport prevented the industry fund's ­efforts to lift its stake in the asset from 5% to 15%.

However, in a defence lodged with the Supreme Court of Victoria based on discovery documents requested for the hearing, the Future Fund said AustralianSuper head of infrastructure Jason Peasley and investment analyst Matthew Fidge concluded on 15 February 2013, that the price allocated by the Future Fund was $19 million less than the "high case" $894 million valuation estimated by Australian Super's own portfolio team during a 6-month analysis.

Furthermore, the document reveals that "on or about 8 and 14 February 2013, at the request of Australian Super," Future Fund senior executives David Neal and Mark Burgess met with their AustralianSuper counter-parts chief executive Ian Silk and chief investment officer Mark Delaney.

The Future Fund said that in the first of these meetings Silk "said words to the effect that the offer price of $875 million for the Perth Airport Interest was within Australian Super's own valuation range."

The Future Fund's defence also said that AustralianSuper's portfolio team believed an acquisition of a further 10% would result in "acceptable exposures to both the asset and the sector." The Future Fund determines that this would have been difficult for Australian Super to achieve given the "all or nothing" operation of the pre-emptive rights in the shareholders' agreement.

The Future Fund also said an AustralianSuper investment committee report shows the fund was "contemplating a legal strategy which seeks to drive the parties to a commercial resolution", and that "any legal action should be considered only in the context of deriving a commercial outcome."

It added that AustralianSuper's own legal advice had said any "legal issues are with AIX and not Future Fund."

At the time of publishing Australian Super could not be reached for comment.

A direction hearing is due to take place on 18 July with the case unlikely to be heard until the end of the year.

Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

Medcraft's appalling speech
I am surprised. More than that, I am astonished, shocked. Last week I was left speechless by the address that the Australian Securities more
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

Women-led companies better for investors
The Australian government end last year released its first Gender Equality Scorecard and while the results are discouraging, a separate ... read more
News Search   
VideoBrought to you by
The two-speed economy in reverse
James provides a local perspective and explains to the audience why the mining investment boom is an aberration and it is now a 'return to the old normal'. To view James Bond's slides please click ... Watch video
The global and Australian economic outlook
The anchor man of the panel, Saul provides great insights on the domestic economy. And bravely makes the forecast that the Reserve Bank will not cut interest rates this year and that the next move is up ... Watch video
The major economies in 2015
Is the European economy dead in the water? Is faith on Abenomics waning? Why should investors be more optimistic about the US economy this year? Chris Probyn, the Boston-based chief economist of State ... Watch video
Market Thinking - A different way of looking at economies?
First, a confession. Mark may have started his career as an economist but he joins this year's panel not as a chief economist but as the head AXA Framlington Asia. This is to the benefit of the audience ... Watch video
Great unwindings
Bob believes plunging oil prices may extend the stockmarket rally by a year or two and discusses why investors could expect a volatile few months. Overall, he believes we are entering an era of low returns ... Watch video
Get it
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Adviser Big Day Out Investment Manager Roadshow-Perth
Adviser Big Day Out Investment Manager Roadshow-Adelaide
Adviser Big Day Out Investment Manager Roadshow-Melbourne
Adviser Big Day Out Investment Manager Roadshow-Brisbane
Adviser Big Day Out Investment Manager Roadshow-Sydney

$245 (inc GST) for 1 year
Copyright © 1992-2015 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something GuLJt9gW