Westpac has sold its infrastructure asset manager Hastings to London-based Northill Capital, for a reputed $160 million, handing over the management of a range of funds that own a diverse portfolio including ports, toll roads and airports. The sale follows an earlier withdrawal by property specialist Charter Hall with NZ’s Morrison & Co also understood to be among the bidders.
After a competitive sale process and concluding Westpac’s 15-year investment in the asset manager that oversees around A$12 billion of assets, the deal follows the August announcement of the failure of the previous sale discussions.
Coincidentally, David Harrison, the chief executive of Charter Hall, said separately last week that his firm would continue to look for diversifying investments from its core property funds but would probably make an acquisition rather than build an infrastructure firm itself, which it clearly had the capacity to do. He declined to detail the reasons for Charter Hall’s withdrawal from the sale following due diligence.
Northill, a privately held business founded in 2010 by former BNY Asset Management senior executive Jonathan Little, is a global asset manager specialising in buying out existing shareholders in established asset management businesses and investing seed capital in high-quality start-ups and early stage managers. Assets under management by businesses in which Northill owns a majority interest were US$48 billion as at September 30.
Little, a partner at Northill, said the asset manager was attracted by the quality and performance of Hastings, according to the Financial Times newspaper.“It’s unusual to find really strong investment driven specialist like Hastings for sale as most of the big 10 infrastructure managers are part of big investment banks or very large global quoted private equity firms,” he reportedly said. “So we have watched this saga unfold over the last few years…and stuck around.”
Lyn Cobley, chief executive of Westpac’s Institutional Bank, said she was pleased that an agreement had been reached with a specialist player in the asset management industry. She added the decision recognised Hastings was non-core to Westpac’s banking operations and longer-term strategy.
“While the sale process attracted nearly a dozen bidders from around the world our objective has always been to find the right fit,” she said. “It has been important to all parties to see that Hastings continues as a long-term successful asset manager with a highly disciplined approach.”
Terry Winder, Hastings chief executive, said Northill was an attractive partner with the expertise to take the business forward.
“Their focus on building a long-term partnership with Hastings and providing significant co-investment capital stood out as a positive to continue the development of Hastings as an independent asset manager,” he said.
Hastings was established by businessman and former star AFL player Mike Fitzpatrick in 1994 as one of the first unlisted infrastructure equity funds before also operating debt funds from 1999. After initial investment in 2002, Westpac acquired the bulk of the business in 2005.
Hastings manages $12.6 billion on behalf of institutional investors, such as Utilities Trust of Australia, with around 100 staff across offices in Melbourne, Sydney, London, New York and Asia. It seeks investments across a range of assets globally including airports, ports, rolling stock, registry infrastructure, toll roads and utilities. Notable recent investments include the Sydney Desalination Plant and TransGrid, the operator of one of the largest electricity transmission networks in Australia.
The deal comes as banks dispose of non-core assets amid changing capital, liquidity and funding regulations. Along with Hastings, Westpac in recent years has sold down its interest in BT Investment Management and some of its operations in the Pacific Islands, maintaining a presence in Papua New Guinea and Fiji.
The agreement between Westpac and Northill in relation to the sale is subject to confirmatory due diligence and regulatory approvals.
Greg Bright is publisher of Investor Strategy News (Australia)